Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2016 | Nov. 30, 2016 | Apr. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Hewlett Packard Enterprise Co, | ||
Entity Central Index Key | 1,645,590 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 28,699,276,157 | ||
Entity Common Stock, Shares Outstanding | 1,664,817,197 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated and Combined State
Consolidated and Combined Statements of Earnings - USD ($) shares in Millions, $ in Millions | Nov. 01, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Net revenue: | |||||
Products | $ 19,250 | $ 19,635 | $ 19,171 | ||
Services | 30,509 | 32,111 | 35,551 | ||
Financing income | 364 | 361 | 401 | ||
Total net revenue | 50,123 | 52,107 | 55,123 | ||
Costs and expenses: | |||||
Cost of products | 12,715 | 12,978 | 12,394 | ||
Cost of services | 22,543 | 23,950 | 26,815 | ||
Financing interest | 249 | 240 | 277 | ||
Research and development | 2,298 | 2,338 | 2,197 | ||
Selling, general and administrative | 7,821 | 8,025 | 8,717 | ||
Amortization of intangible assets | 755 | 852 | 906 | ||
Restructuring charges | 1,236 | 954 | 1,471 | ||
Acquisition and other related charges | 178 | 89 | 11 | ||
Separation costs | 598 | 797 | 0 | ||
Defined benefit plan settlement charges | 0 | 225 | 0 | ||
Impairment of data center assets | 0 | 136 | 0 | ||
Gain on H3C and MphasiS divestitures | (2,420) | 0 | 0 | ||
Total costs and expenses | 45,973 | 50,584 | 52,788 | ||
Earnings from operations | 4,150 | 1,523 | 2,335 | ||
Interest and other, net | (312) | (51) | (91) | ||
Tax indemnification adjustments | 317 | 0 | 0 | ||
Loss from equity interests | (76) | (2) | 0 | ||
Earnings before taxes | 4,079 | 1,470 | 2,244 | ||
(Provision) benefit for taxes | (918) | 991 | (596) | ||
Net earnings | $ 3,161 | $ 2,461 | $ 1,648 | ||
Net earnings per share: | |||||
Basic (in dollars per share) | [1] | $ 1.84 | $ 1.36 | $ 0.91 | |
Diluted (in dollars per share) | [1] | 1.82 | 1.34 | 0.90 | |
Cash dividends declared per share (in dollars per share) | $ 0.22 | $ 0 | $ 0 | ||
Weighted-average shares used to compute net earnings per share: | |||||
Basic (in shares) | [1] | 1,715 | 1,804 | 1,804 | |
Diluted (in shares) | [1] | 1,739 | 1,834 | 1,834 | |
Former Parent Company | |||||
Distributed (in shares) | 1,800 | ||||
[1] | On November 1, 2015, HP Inc. (formerly Hewlett-Packard Company) distributed a total of 1.8 billion shares of Hewlett Packard Enterprise common stock to HP Inc. stockholders as of the record date. The number of shares used to compute basic and diluted net earnings per share ("EPS") for the period ended October 31, 2015 is used for the calculation of net EPS for October 31, 2014. See Note 16, "Net Earnings Per Share", for further details. |
Consolidated and Combined Stat3
Consolidated and Combined Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 3,161 | $ 2,461 | $ 1,648 |
Change in net unrealized (losses) gains on available-for-sale securities: | |||
Net unrealized (losses) gains arising during the period | (4) | (10) | 5 |
Losses (gains) reclassified into earnings | 3 | 0 | (1) |
Change in unrealized (losses) gains on available-for-sale securities | (1) | (10) | 4 |
Change in net unrealized (losses) gains on cash flow hedges: | |||
Net unrealized gains arising during the period | 226 | 481 | 111 |
Net (gains) losses reclassified into earnings | (270) | (480) | 60 |
Change in unrealized gains (losses) on cash flow hedges | (44) | 1 | 171 |
Change in unrealized components of defined benefit plans: | |||
Losses arising during the period | (1,777) | (382) | (794) |
Amortization of actuarial loss and prior service benefit | 284 | 214 | 82 |
Curtailments, settlements and other | (18) | 4 | 18 |
Plans transferred from former Parent during the period | 0 | (2,607) | 0 |
Merged into former Parent's Shared plans during the period | 0 | 0 | 61 |
Change in unrealized components of defined benefit plans | (1,511) | (2,771) | (633) |
Cumulative translation adjustment arising during the period | (154) | (198) | (85) |
Cumulative translation adjustment arising during the period | 75 | 0 | 0 |
Change in foreign currency translation adjustment | (79) | (198) | (85) |
Other comprehensive loss before taxes | (1,635) | (2,978) | (543) |
Benefit (provision) for taxes | 51 | 211 | (10) |
Other comprehensive loss, net of taxes | (1,584) | (2,767) | (553) |
Comprehensive income (loss) | $ 1,577 | $ (306) | $ 1,095 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 12,987 | $ 9,842 |
Accounts receivable | 6,909 | 8,538 |
Financing receivables | 2,923 | 2,918 |
Inventory | 1,774 | 2,198 |
Other current assets | 4,324 | 6,468 |
Total current assets | 28,917 | 29,964 |
Property, plant and equipment | 9,636 | 9,886 |
Long-term financing receivables and other assets | 13,216 | 10,875 |
Investment in equity interests | 2,648 | 0 |
Goodwill | 24,178 | 27,261 |
Intangible assets | 1,084 | 1,930 |
Total assets | 79,679 | 79,916 |
Current liabilities: | ||
Notes payable and short-term borrowings | 3,532 | 691 |
Accounts payable | 5,943 | 5,828 |
Employee compensation and benefits | 2,364 | 2,902 |
Taxes on earnings | 420 | 476 |
Deferred revenue | 4,610 | 5,154 |
Accrued restructuring | 671 | 628 |
Other accrued liabilities | 4,991 | 6,314 |
Total current liabilities | 22,531 | 21,993 |
Long-term debt | 12,608 | 15,103 |
Other liabilities | 13,022 | 8,902 |
Commitments and contingencies | ||
HPE stockholders' equity: | ||
Preferred stock, $0.01 par value (300 shares authorized; none issued) | 0 | 0 |
Common stock, $0.01 par value (9,600 shares authorized; 1,666 shares issued and outstanding at October 31, 2016) | 17 | 0 |
Additional paid-in capital | 35,248 | 0 |
Retained earnings | 2,782 | 0 |
Former Parent company investment | 0 | 38,550 |
Accumulated other comprehensive loss | (6,599) | (5,015) |
Total HPE stockholders' equity | 31,448 | 33,535 |
Non-controlling interests | 70 | 383 |
Total stockholders' equity | 31,518 | 33,918 |
Total liabilities and stockholders' equity | $ 79,679 | $ 79,916 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) | Oct. 31, 2016$ / sharesshares |
Statement of Financial Position [Abstract] | |
Preferred stock, par value ($ per share) | $ / shares | $ 0.01 |
Preferred stock, authorized (shares) | 300,000,000 |
Preferred stock, issued (shares) | 0 |
Common stock, par value ($ per share) | $ / shares | $ 0.01 |
Common stock, authorized (shares) | 9,600,000,000 |
Common stock, issued (shares) | 1,666,000,000 |
Common stock, outstanding (shares) | 1,666,000,000 |
Consolidated and Combined Stat6
Consolidated and Combined Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Cash flows from operating activities: | |||
Net earnings | $ 3,161 | $ 2,461 | $ 1,648 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 3,775 | 3,947 | 4,144 |
Stock-based compensation expense | 558 | 565 | 427 |
Provision for doubtful accounts | 61 | 52 | 80 |
Provision for inventory | 171 | 155 | 125 |
Restructuring charges | 1,236 | 954 | 1,471 |
Deferred taxes on earnings | (1,345) | (2,522) | (304) |
Excess tax benefit from stock-based compensation | (20) | (100) | (44) |
Gain on H3C and MphasiS divestitures | (2,420) | 0 | 0 |
Loss from equity interests | 76 | 2 | 0 |
Other, net | 195 | 374 | 11 |
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | 991 | 9 | 986 |
Financing receivables | (301) | (393) | 428 |
Inventory | 34 | (424) | 69 |
Accounts payable | 66 | 868 | 611 |
Taxes on earnings | 1,615 | 956 | 404 |
Restructuring | (1,044) | (1,021) | (1,239) |
Other assets and liabilities | (1,851) | (2,222) | (1,906) |
Net cash provided by operating activities | 4,958 | 3,661 | 6,911 |
Cash flows from investing activities: | |||
Investment in property, plant and equipment | (3,280) | (3,344) | (3,620) |
Proceeds from sale of property, plant and equipment | 450 | 380 | 606 |
Purchases of available-for-sale securities and other investments | (656) | (243) | (940) |
Maturities and sales of available-for-sale securities and other investments | 585 | 298 | 1,023 |
Payments made in connection with business acquisitions, net of cash acquired | (22) | (2,644) | (49) |
Proceeds from business divestitures, net | 3,342 | 140 | 6 |
Net cash provided by (used in) investing activities | 419 | (5,413) | (2,974) |
Cash flows from financing activities: | |||
Short-term borrowings with original maturities less than 90 days, net | (71) | (39) | 18 |
Issuance of debt | 1,074 | 866 | 852 |
Payment of debt | (833) | (1,077) | (1,135) |
Settlement of cash flow hedge | 3 | 0 | 0 |
Issuance of common stock under employee stock plans | 119 | 0 | 0 |
Repurchase of common stock | (2,662) | 0 | 0 |
Net transfers from (to) former Parent | 491 | 9,440 | (3,542) |
Issuance of Senior Notes relating to Separation | 0 | 14,546 | 0 |
Distribution of net proceeds of Senior Notes relating to Separation, to former Parent | 0 | (14,529) | 0 |
Cash dividends paid | (373) | (32) | (37) |
Excess tax benefit from stock-based compensation | 20 | 100 | 44 |
Net cash (used in) provided by financing activities | (2,232) | 9,275 | (3,800) |
Increase in cash and cash equivalents | 3,145 | 7,523 | 137 |
Cash and cash equivalents at beginning of period | 9,842 | 2,319 | 2,182 |
Cash and cash equivalents at end of period | 12,987 | 9,842 | 2,319 |
Supplemental cash flow disclosures: | |||
Income taxes paid, net of refunds | 656 | 192 | 302 |
Interest expense paid | 585 | 291 | 357 |
Supplemental schedule of non-cash investing and financing activities: | |||
Net transfers of property, plant and equipment from former Parent | $ 0 | $ 1,788 | $ 0 |
Consolidated and Combined Stat7
Consolidated and Combined Statements of Stockholders' Equity Statement - USD ($) shares in Thousands, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Former Parent Company Investment | Retained Earnings | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity |
Balance at Oct. 31, 2013 | $ 39,683 | $ (1,695) | $ 37,988 | $ 387 | $ 38,375 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net earnings | $ 1,648 | 1,648 | 1,648 | 1,648 | |||||
Other comprehensive loss | (553) | 0 | (553) | (553) | (553) | ||||
Comprehensive income | 1,095 | 0 | 1,095 | 1,095 | |||||
Net transfers to former Parent | (2,307) | (2,307) | (2,307) | ||||||
Changes in non-controlling interests | 9 | 9 | |||||||
Balance at Oct. 31, 2014 | 39,024 | (2,248) | 36,776 | 396 | 37,172 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net earnings | 2,461 | 2,461 | 0 | 2,461 | 2,461 | ||||
Other comprehensive loss | (2,767) | (2,767) | (2,767) | (2,767) | |||||
Comprehensive income | (306) | (306) | (306) | ||||||
Net transfers to former Parent | 11,594 | 11,594 | 11,594 | ||||||
Changes in non-controlling interests | (13) | (13) | |||||||
Distribution of net proceeds of Senior Notes to former Parent | (14,529) | (14,529) | (14,529) | ||||||
Balance at Oct. 31, 2015 | 33,918 | 38,550 | (5,015) | 33,535 | 383 | 33,918 | |||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net earnings | 3,161 | $ 3,161 | 3,161 | 33 | 3,194 | ||||
Other comprehensive loss | (1,584) | (1,584) | (1,584) | (1,584) | |||||
Comprehensive income | 1,577 | 1,577 | 1,610 | ||||||
Changes in non-controlling interests | (9) | (9) | |||||||
Separation-related adjustments | (1,200) | (1,236) | (1,236) | (1,236) | |||||
Issuance of common stock and reclassification of former parent company investment (in shares) | 1,803,719 | ||||||||
Issuance of common stock and reclassification of former Parent company investment | $ 18 | $ 37,296 | (37,314) | 0 | 0 | ||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 20,374 | ||||||||
Issuance of common stock in connection with employee stock plans and other | 15 | 15 | 15 | ||||||
Repurchases of common stock (in shares) | (157,761) | ||||||||
Repurchases of common stock | $ (1) | (2,661) | (2,662) | (2,662) | |||||
Tax benefit from employee stock plans | 1 | 1 | 1 | ||||||
Cash dividends declared | (379) | (379) | (379) | ||||||
Stock-based compensation expense | 597 | 597 | 597 | ||||||
MphasiS divestiture | (337) | (337) | |||||||
Balance at Oct. 31, 2016 | $ 31,518 | $ 17 | $ 35,248 | $ 0 | $ 2,782 | $ (6,599) | $ 31,448 | $ 70 | $ 31,518 |
Balance (in shares) at Oct. 31, 2016 | 1,666,000 | 1,666,332 |
Overview and Summary of Signifi
Overview and Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Background Hewlett Packard Enterprise Company ("we", "us", "our", "Hewlett Packard Enterprise", "HPE" or "the Company") is an industry leading technology company that enables customers to go further, faster. With the industry's most comprehensive portfolio, spanning the cloud to the data center to workplace applications, its technology and services help customers around the world make IT more efficient, more productive and more secure. Hewlett Packard Enterprise's customers range from small- and medium-sized businesses ("SMBs") to large global enterprises. On November 1, 2015, the Company became an independent publicly-traded company through a pro rata distribution by HP Inc. ("former Parent" or "HPI"), formerly known as Hewlett-Packard Company ("HP Co."), of 100% of the outstanding shares of Hewlett Packard Enterprise Company to HP Inc.'s stockholders (the "Separation"). Each HP Inc. stockholder of record received one share of Hewlett Packard Enterprise common stock for each share of HP Inc. common stock held on the record date. Approximately 1.8 billion shares of Hewlett Packard Enterprise common stock were distributed on November 1, 2015 to HP Inc. stockholders. In connection with the Separation, Hewlett Packard Enterprise's common stock began trading "regular-way" under the ticker symbol "HPE" on the New York Stock Exchange on November 2, 2015. In connection with the Separation, the Company entered into a Tax Matters Agreement with former Parent, which resulted in the indemnification of certain pre-Separation tax liabilities. During the fiscal year ended October 31, 2016, Separation-related adjustments totaling $1.2 billion were recorded in stockholders' equity. Separation-related adjustments to equity primarily reflected the impact of the income tax indemnification and the transfer of certain deferred tax assets and liabilities between former Parent and the Company. See Note 18, "Guarantees, Indemnifications and Warranties", for a full description of the Tax Matters Agreement. Basis of Presentation Prior to October 31, 2015, the Combined Financial Statements were derived from the Consolidated Financial Statements and accounting records of former Parent, as if the Company was operating on a standalone basis during the periods presented. From and after October 31, 2015, substantially all of the assets and liabilities and operations of the Company were transferred from former Parent to the Company, and Consolidated and Combined Financial Statements included the accounts of the Company and its wholly-owned subsidiaries in accordance with the separation agreement for the transfer from former Parent to the Company. These Consolidated and Combined Financial Statements of the Company were prepared in connection with the Separation and in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). Prior to October 31, 2015, the Combined and Consolidated Statements of Earnings and Comprehensive Income of the Company reflect allocations of general corporate expenses from former Parent including, but not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement, and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount, or other relevant measures. Management of the Company and former Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. The allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Former Parent's cash had not been assigned to the Company as of October 31, 2015 because those cash balances were not directly attributable to the Company. The Company reflected transfers of cash to and from former Parent's cash management system as a component of former Parent company investment on the Consolidated Balance Sheets. Former Parent's long-term debt had not been attributed to the Company prior to October 31, 2015 because former Parent's borrowings were not the legal obligation of the Company. As of October 31, 2015, substantially all of the assets and liabilities and operations were transferred from former Parent to the Company and the Consolidated Balance Sheet of the Company included the accounts of the Company and its wholly-owned subsidiaries. Additionally, subsequent to the Separation, the Company received a final cash allocation from HP Inc. and accrued certain general cross-indemnifications liabilities. See Note 14, "Related Party Transactions and Former Parent Company Investment", and Note 18, "Guarantees, Indemnifications and Warranties", for a full description of these items. Former Parent maintained various benefit and stock-based compensation plans at a corporate level and other benefit plans at a subsidiary level. The Company's employees participated in those programs and a portion of the cost of those plans was included in the Company's Consolidated and Combined Financial Statements. See Note 4, "Retirement and Post-Retirement Benefit Plans", and Note 5, "Stock-based Compensation", for a further description. Principles of Combination and Consolidation The accompanying Consolidated and Combined Financial Statements include the accounts of the Company and other subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated and combined businesses of the Company have been eliminated. Prior to the Separation, intercompany transactions between the Company and former Parent are considered to be effectively settled in the Consolidated and Combined Financial Statements at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated and Combined Statements of Cash Flows within financing activities and within the stockholders' equity section of the Consolidated Balance Sheets in Former Parent company investment. The Company accounts for investments in companies over which it has the ability to exercise significant influence but does not hold a controlling interest under the equity method of accounting, and the Company records its proportionate share of income or losses in Loss from equity interests in the Consolidated and Combined Statements of Earnings. The Company's proportionate share of losses in its equity method investments previously included in Interest and other, net, and Other, net, in the Consolidated and Combined Statements of Earnings and Statements of Cash Flows, respectively, for all prior periods, were reclassified to Loss from equity interests to conform to the current year presentation. Non-controlling interests are presented as a separate component within Total stockholders' equity in the Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Consolidated and Combined Statements of Earnings and are not presented separately, as they were not material for any period presented. Segment Realignment The Company has implemented certain segment and business unit realignments in order to align its segment financial reporting more closely with its current business structure. Reclassifications of certain prior year segment and business unit financial information have been made to conform to the current-year presentation. None of the changes impact the Company's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share ("EPS"). See Note 2, "Segment Information", for a further discussion of the Company's segment realignment. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company's Consolidated and Combined Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Foreign Currency Translation The Company predominately uses the U.S. dollar as its functional currency. Assets and liabilities denominated in non-U.S. currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Net revenue, costs and expenses denominated in non-U.S. currencies are recorded in U.S. dollars at the average rates of exchange prevailing during the period. The Company includes gains or losses from foreign currency remeasurement in Interest and other, net in the Consolidated and Combined Statements of Earnings and gains and losses from cash flow hedges in Net revenue as the hedged revenue is recognized. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and the Company records the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets. The effect of foreign currency exchange rates on cash and cash equivalents was not material for any of the fiscal years presented. Former Parent Company Investment Former Parent company investment in the Consolidated Balance Sheets and Consolidated and Combined Statements of Stockholders' Equity represents former Parent's historical investment in the Company, the net effect of transactions with and allocations from former Parent and the Company's accumulated earnings. See Note 14, "Related Party Transactions and former Parent Company Investment", for further information about transactions between the Company and former Parent. Revenue Recognition General The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services are rendered, the sales price or fee is fixed or determinable, and collectability is reasonably assured. Additionally, the Company recognizes hardware revenue on sales to channel partners, including resellers, distributors or value-added solution providers at the time of delivery when the channel partners have economic substance apart from the Company, and the Company has completed its obligations related to the sale. The Company generally recognizes revenue for its standalone software sales to channel partners on receipt of evidence that the software has been sold to a specific end user. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified refund or return rights. The Company reduces revenue for customer and distributor programs and incentive offerings, including price protection, rebates, promotions, other volume-based incentives, and expected returns, at the later of the date of revenue recognition or the date the sales incentive is offered. Future market conditions and product transitions may require the Company to take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered. For certain incentive programs, the Company estimates the number of customers expected to redeem the incentive based on historical experience and the specific terms and conditions of the incentive. In instances when revenue is derived from sales of third-party vendor products or services, the Company records revenue on a gross basis when the Company is a principal to the transaction and on a net basis when the Company is acting as an agent between the customer and the vendor. The Company considers several factors to determine whether it is acting as a principal or an agent, most notably whether the Company is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. The Company reports revenue net of any taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Multiple element arrangements When a sales arrangement contains multiple elements or deliverables, such as hardware and software products, and/or services, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE") of selling price, if available, third-party evidence ("TPE") if VSOE of selling price is not available, or estimated selling price ("ESP") if neither VSOE of selling price nor TPE is available. The Company establishes VSOE of selling price using the price charged for a deliverable when sold separately and, in rare instances, using the price established by management having the relevant authority. The Company establishes TPE of selling price by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The Company establishes ESP based on management judgment considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life-cycle. Consideration is also given to market conditions such as competitor pricing strategies and technology industry life-cycles. In most arrangements with multiple elements, the Company allocates the transaction price to the individual units of accounting at inception of the arrangement based on their relative selling price. In multiple element arrangements that include software that is more-than-incidental, the Company allocates the transaction price to the individual units of accounting for the non-software deliverables and to the software deliverables as a group using the relative selling price of each of the deliverables in the arrangement based on the selling price hierarchy. If the arrangement contains more than one software deliverable, the transaction price allocated to the group of software deliverables is then allocated to each component software deliverable. The Company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value to the customer. For elements with no standalone value, the Company recognizes revenue consistent with the pattern of the undelivered elements. If the arrangement includes a customer-negotiated refund or return right or other contingency relative to the delivered items, and the delivery and performance of the undelivered items is considered probable and substantially within the Company's control, the delivered element constitutes a separate unit of accounting. In arrangements with combined units of accounting, changes in the allocation of the transaction price among elements may impact the timing of revenue recognition for the contract but will not change the total revenue recognized for the contract. Product revenue Hardware Under the Company's standard terms and conditions of sale, the Company transfers title and risk of loss to the customer at the time product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain. The Company reduces revenue for estimated customer returns, price protection, rebates and other programs offered under sales agreements established by the Company with its distributors and resellers. The Company records revenue from the sale of equipment under sales-type leases as product revenue at the inception of the lease. The Company accrues the estimated cost of post-sale obligations, including standard product warranties, based on historical experience at the time the Company recognizes revenue. Software The Company recognizes revenue from perpetual software licenses at the inception of the license term, assuming all revenue recognition criteria have been satisfied. Term-based software license revenue is generally recognized ratably over the term of the license. The Company uses the residual method to allocate revenue to software licenses at the inception of the arrangement when VSOE of fair value for all undelivered elements, such as post-contract customer support, exists and all other revenue recognition criteria have been satisfied. The Company recognizes revenue from maintenance and unspecified upgrades or updates provided on a when-and-if-available basis ratably over the period during which such items are delivered. The Company recognizes revenue for hosting or software-as-a-service ("SaaS") arrangements as the service is delivered, generally on a straight-line basis, over the contractual period of performance. In hosting arrangements, the Company considers the rights provided to the customer (e.g. whether the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty, and the feasibility of the customer to operate or contract with another vendor to operate the software) in determining whether the arrangement includes the sale of a software license. In hosting arrangements where software licenses are sold, license revenue is generally recognized according to whether perpetual or term licenses are sold, when all other revenue recognition criteria are satisfied. Services revenue The Company recognizes revenue from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements, ratably over the contract period and recognizes the costs associated with these contracts as incurred. For time and material contracts, the Company recognizes revenue as services are rendered and recognizes costs as they are incurred. The Company recognizes revenue from certain fixed-price contracts, such as consulting arrangements, as work progresses over the contract period on a proportional performance basis, as determined by the percentage of labor costs incurred to date compared to the total estimated labor costs of a contract. The Company recognizes revenue on fixed-price contracts for design and build projects (to design, develop and construct software and systems) using the percentage-of-completion method. The Company uses the cost-to-cost method to measure progress toward completion as determined by the percentage of cost incurred to date compared to the total estimated costs of the project. Estimates of total project costs for fixed-price contracts are regularly reassessed during the life of a contract. Provisions for estimated losses on fixed-priced contracts are recognized in the period when such losses become known. If reasonable and reliable cost estimates for a project cannot be made, the Company uses the completed contract method and recognizes revenue and costs upon service completion. The Company generally recognizes outsourcing services revenue in the period when the service is provided and the amount earned is not contingent on the occurrence of any future event. The Company recognizes revenue using an objective measure of output for unit-priced contracts. Revenue for fixed-price outsourcing contracts with periodic billings is recognized on a straight-line basis if the service is provided evenly during the contract term. Provisions for estimated losses on outsourcing arrangements are recognized in the period when such losses become probable and estimable. The Company recognizes revenue from operating leases on a straight-line basis as service revenue over the rental period. Financing income Sales-type and direct-financing leases produce financing income, which the Company recognizes at consistent rates of return over the lease term. Deferred revenue and deferred costs The Company records amounts invoiced to customers in excess of revenue recognized as deferred revenue until the revenue recognition criteria are satisfied. The Company records revenue that is earned and recognized in excess of amounts invoiced on services contracts as trade receivables. Deferred revenue represents amounts invoiced in advance for product support contracts, software customer support contracts, outsourcing startup services work, consulting and integration projects, product sales or leasing income. The Company recognizes costs associated with outsourcing contracts as incurred, unless such costs are considered direct and incremental to the startup phase of the contract, in which case the Company defers these costs during the startup phase and subsequently amortizes such costs over the period that outsourcing services are provided, once those services commence. The Company amortizes deferred contract costs on a straight-line basis over the remaining term of the contract unless facts and circumstances of the contract indicate a shorter period is more appropriate. Based on actual and projected contract financial performance indicators, the Company analyzes the recoverability of deferred contract costs using the undiscounted estimated cash flows of the contract over its remaining term. If such undiscounted cash flows are insufficient to recover the carrying amount of deferred contract costs and long-lived assets directly associated with the contract, the deferred contract costs are first impaired. If a cash flow deficiency remains after reducing the carrying amount of the deferred contract costs to zero, the Company evaluates any remaining long-lived assets related to that contract for impairment. Shipping and Handling The Company includes costs related to shipping and handling in Cost of products. Stock-Based Compensation Stock-based compensation expense is based on the measurement date fair value of the award and is recognized only for those awards expected to meet the service and performance vesting conditions on a straight-line basis over the requisite service period of the award. Stock-based compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions. The forfeiture rate is estimated based on historical experience. Prior to November 1, 2015, the Company's employees participated in former Parent's stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company's employees as well as an allocation of former Parent's corporate and shared functional employee expenses. Retirement and Post-Retirement Plans The Company sponsors defined benefit pension plans worldwide, of which the most significant are in the United Kingdom. There are three pension plans in the UK which are all closed to new entrants, but under which, members continue to earn benefit accruals. All of these plans provide benefits based on final pay and years of service and generally require contributions from members. These plans are accounted for as single employer benefit plans. The net benefit plan obligations and the related benefit plan expense of these plans have been recorded in the Company's Consolidated and Combined Financial Statements for fiscal 2016. Prior to October 31, 2015 and with the exception of certain defined benefit pension plans, of which the Company was the sole sponsor, certain of Hewlett Packard Enterprise eligible employees, retirees and other former employees participated in certain U.S. and international defined benefit pension plans and other post-employment plans offered by former Parent. These plans, which included participants that were both Company employees and other employees of former Parent ("Shared" plans), were accounted for as multiemployer benefit plans and the related net benefit plan obligations were not included in the Company's historical Combined Balance Sheets through July 31, 2015. The related benefit plan expenses were allocated to the Company based on the Company's labor costs and allocations of corporate and other shared functional personnel. Certain benefit plans in the Company's operations only included active, retired and other former Company employees ("Direct" plans) and were accounted for as single employer benefit plans. Accordingly, the net benefit plan obligations and the related benefit plan expense of those plans have been recorded in the Company's Consolidated and Combined Financial Statements for all periods presented. The most significant of these Direct plans are located in the United Kingdom, Germany, Canada, and the United States. In connection with the Separation, during the three months ended October 31, 2015, former Parent transferred to the Company plan assets and liabilities related to newly-created single employer plans, primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees. The Company generally amortizes unrecognized actuarial gains and losses on a straight-line basis over the average remaining estimated service life or, in the case of closed plans, life expectancy of participants. In some cases, actuarial gains and losses are amortized using the corridor approach. See Note 4, "Retirement and Post-Retirement Benefit Plans", for a full description of these plans and the accounting and funding policies. Advertising Costs to produce advertising are expensed as incurred during production. Costs to communicate advertising are expensed when the advertising is first run. Advertising expense totaled approximately $340 million in fiscal 2016, $224 million in fiscal 2015 and $220 million in fiscal 2014. Restructuring The Company records charges associated with former Parent-approved restructuring plans to reorganize one or more of the Company's business segments, to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes and accelerate innovation. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations and site closure and consolidation plans. The Company accrues for severance and other employee separation costs under these actions when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on existing plans, historical experiences and negotiated settlements. Taxes on Earnings For fiscal 2015 and prior, current income tax liabilities related to entities which filed jointly with former Parent are assumed to be immediately settled with former Parent and are relieved through the former Parent company investment account and the Net transfers to former Parent in the Consolidated and Combined Statements of Cash Flows. Income tax expense and other income tax-related information contained in these Consolidated and Combined Financial Statements are presented on a separate return basis, as if the Company filed its own tax returns. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company were a separate taxpayer and a standalone enterprise for the periods presented. As of November 1, 2015, Hewlett Packard Enterprise Company was formally separated from former Parent; as such, any current income tax liabilities generated by the Company will be settled by the Company and no longer included with tax filings of former Parent. The Company recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company records accruals for uncertain tax positions when the Company believes that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these accruals when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of adjustments for uncertain tax positions, effects of potential settlement of certain pre-Separation Hewlett-Packard Company income tax liabilities, as well as any related interest and penalties. Accounts Receivable The Company establishes an allowance for doubtful accounts for accounts receivable. The Company records a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. If there are additional changes in circumstances related to the specific customer, the Company further adjusts estimates of the recoverability of receivables. The Company maintains bad debt reserves for all other customers based on a variety of factors, including the use of third-party credit risk models that generate quantitative measures of default probabilities based on market factors, the financial condition of customers, the length of time receivables are past due, trends in the weighted-average risk rating for the portfolio, macroeconomic conditions, information derived from competitive benchmarking, significant one-time events, and historical experience. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. The Company participated in former Parent's third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers through July 31, 2015. From and after August 1, 2015, all of the Company's transactions are under its own third-party revolving short-term financing arrangements. These financing arrangements, which in certain cases provide for partial recourse, result in the transfer of the Company's trade receivables to a third party. The Company reflects amounts transferred to, but not yet collected from, the third party in Accounts receivable in the Consolidated Balance Sheets. For arrangements involving an element of recourse, the fair value of the recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Balance Sheets. Concentrations of Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, investments, receivables from trade customers and contract manufacturers, financing receivables and derivatives. Prior to October 31, 2015, the Company participated in cash management, funding arrangements and risk management programs managed by former Parent. After October 31, 2015, in connection with the Separation, the Company maintains cash and cash equivalents, investments, derivatives, and certain other financial instruments with various financial institutions. These financial institutions are located in many different geographic regions, and the Company's policy is designed to limit exposure from any particular institution. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. The Company utilizes derivative contracts to protect against the effects of foreign currency and interest rate exposures. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. Credit risk with respect to accounts receivable and financing receivables i |
Segment Information
Segment Information | 12 Months Ended |
Oct. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Hewlett Packard Enterprise's operations are organized into five segments for financial reporting purposes: the Enterprise Group ("EG"), Enterprise Services ("ES"), Software, 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"), Meg Whitman, uses to evaluate, view and run 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 the Company's CODM to evaluate segment results. A summary description of each segment follows. The Enterprise Group provides servers, storage, networking, and technology services that, when combined with Hewlett Packard Enterprise's cloud solutions, enable customers to manage applications across virtual private cloud, private cloud and traditional IT environments. Described below are Hewlett Packard Enterprise's business units and capabilities within EG. • Servers offers both Industry Standard Servers ("ISS") as well as Mission-Critical Servers ("MCS") to address the full array of the Company's customers' computing needs. ISS provides a range of products, from entry level servers through premium HPE ProLiant servers, which run primarily on Windows, Linux and virtualization platforms from software providers including Microsoft Corporation ("Microsoft") and VMware, Inc. ("VMware") and open sourced software from other major vendors while leveraging x86 processors from Intel Corporation ("Intel") and Advanced Micro Devices ("AMD"). For the most mission-critical workloads, HPE delivers Integrity servers based on the Intel® Itanium® processor, HPE Integrity NonStop solutions and mission critical x86 ProLiant servers. • Storage offers Converged Storage solutions and traditional storage. Converged Storage solutions include 3PAR StoreServ, StoreOnce, all-flash arrays, Software Defined and StoreVirtual products. Traditional storage includes tape, storage networking and legacy external disk products such as MSA, EVA and XP. • Networking offers wireless local area network equipment, mobility and security software, switches, routers, and network management products that span data centers, campus and branch environments and deliver software defined networking and unified communications capabilities. • Technology Services provides support services and technology consulting to assist customers as they transform their business and IT. These services are available in the form of service contracts, pre-packaged offerings (HPE Care Pack services) or on a customized basis. Enterprise Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains within traditional and Strategic Enterprise Service ("SES") offerings which includes analytics and data management, security and cloud services. Described below are the business units and capabilities within ES. • Infrastructure Technology Outsourcing delivers comprehensive services that encompass the management of data centers, IT security, cloud computing, workplace technology, networks, unified communications and enterprise service management. • Application and Business Services helps clients develop, revitalize and manage their applications and information assets and provides end-to-end, industry-specific business process services. Software provides big data analytics and applications, enterprise security, application testing and delivery management and IT operations management solutions for businesses and other enterprises of all sizes. These software offerings include licenses, support, professional services, and software-as-a-service ("SaaS"). Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers to enable the creation of unique technology deployment models and acquire complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. Providing 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. 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. Corporate Investments includes Hewlett Packard Labs and certain cloud-related business incubation projects, among others. Segment Policy Hewlett Packard Enterprise derives the results of its business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those the consolidated company uses. The CODM measures the performance of each segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to each of the segments. Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by FS. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements. Hewlett Packard Enterprise periodically engages in intercompany advanced royalty payment and licensing arrangements that may result in advance payments between subsidiaries. Revenues from these intercompany arrangements are deferred and recognized as earned over the term of the arrangement by the Hewlett Packard Enterprise legal entities involved in such transactions; however, these advanced payments are eliminated from revenues as reported by Hewlett Packard Enterprise and its business segments. As disclosed in Note 6, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $3.7 billion and $5.0 billion during fiscal 2016 and 2015 respectively. In these transactions, the payments were received in the U.S. from a foreign consolidated affiliate, with a deferral of intercompany revenues over the term of the arrangements, approximately 5 years . The impact of these intercompany arrangements is eliminated from both Hewlett Packard Enterprise's consolidated and segment revenues. Financing interest in the Consolidated and Combined Statements of Earnings reflects interest expense on borrowing- and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS. Prior to October 9, 2015, such financing interest expense resulted from debt issued by former Parent. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses which it manages at the corporate level. These unallocated costs include certain corporate governance costs, stock-based compensation expense, amortization of intangible assets, restructuring charges, acquisition and other related charges, separation costs, defined benefit plan settlement charges, impairment of data center assets and gains on the divestitures of H3C and MphasiS. Segment Organizational Changes Effective at the beginning of the first quarter of fiscal 2016, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes resulted in: (i) within the Enterprise Group segment, the consolidation of the Industry Standard Servers and Business Critical Systems business units into the newly formed Servers business unit; and (ii) the transfer of certain cloud-related marketing headcount activities from the Corporate Investment segment to the Enterprise Group segment. The Company reflected these changes to its segment information retrospectively to the earliest period presented, which resulted in: (i) the consolidation of net revenue from the Industry Standard Servers and Business Critical Systems business units into the Servers business unit within the Enterprise Group segment; and (ii) the transfer of operating expenses from the Corporate Investment segment to the Enterprise Group segment. These changes had no impact on Hewlett Packard Enterprise's previously reported combined and consolidated net revenue, earnings from operations, net earnings or net earnings per share. In May 2016, Tsinghua Holdings’ subsidiary, Unisplendour Corporation, purchased 51% of a new business named H3C Technologies ("H3C"), comprising Hewlett Packard Enterprise’s former H3C Technologies and China-based servers, storage and technology services businesses, which were previously reported within the EG segment. In the third quarter of fiscal 2016, the Company completed the sale of its assets and liabilities that were identified as part of the H3C transaction. The Company retained a 49% interest in the new company, which it recorded as an equity method investment. See Note 9, "Acquisitions and Divestitures" and Note 20, "Equity Method Investments" for additional information. In the third quarter of fiscal 2016, the Company signed a definitive agreement with The Blackstone Group to sell its equity stake in MphasiS Limited ("MphasiS" or “MphasiS disposal group”). The financial results of MphasiS were previously reported within the ES segment. In the fourth quarter of fiscal 2016, the Company completed the sale of its entire equity stake in MphasiS and divested all of the assets and liabilities identified as a part of this transaction. See Note 9, "Acquisitions and Divestitures" for additional information. Segment Operating Results Enterprise Enterprise Software Financial Corporate Total In millions 2016 Net revenue $ 26,017 $ 18,094 $ 2,912 $ 3,097 $ 3 $ 50,123 Intersegment net revenue and other 1,202 778 283 93 — 2,356 Total segment net revenue $ 27,219 $ 18,872 $ 3,195 $ 3,190 $ 3 $ 52,479 Earnings (loss) from operations $ 3,459 $ 1,457 $ 749 $ 336 $ (348 ) $ 5,653 2015 Net revenue $ 26,668 $ 19,010 $ 3,308 $ 3,114 $ 7 $ 52,107 Intersegment net revenue and other 1,239 796 314 102 — 2,451 Total segment net revenue $ 27,907 $ 19,806 $ 3,622 $ 3,216 $ 7 $ 54,558 Earnings (loss) from operations $ 3,862 $ 1,019 $ 788 $ 349 $ (423 ) $ 5,595 2014 Net revenue $ 26,812 $ 21,297 $ 3,609 $ 3,401 $ 4 $ 55,123 Intersegment net revenue and other 915 1,101 324 97 — 2,437 Total segment net revenue $ 27,727 $ 22,398 $ 3,933 $ 3,498 $ 4 $ 57,560 Earnings (loss) from operations $ 3,909 $ 818 $ 871 $ 389 $ (245 ) $ 5,742 The reconciliation of segment operating results to Hewlett Packard Enterprise consolidated and combined results was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions Net Revenue: Total segments $ 52,479 $ 54,558 $ 57,560 Elimination of intersegment net revenue and other (2,356 ) (2,451 ) (2,437 ) Total Hewlett Packard Enterprise consolidated and combined net revenue $ 50,123 $ 52,107 $ 55,123 Earnings before taxes: Total segment earnings from operations $ 5,653 $ 5,595 $ 5,742 Corporate and unallocated costs and eliminations (598 ) (454 ) (592 ) Stock-based compensation expense (558 ) (565 ) (427 ) Amortization of intangible assets (755 ) (852 ) (906 ) Restructuring charges (1,236 ) (954 ) (1,471 ) Acquisition and other related charges (178 ) (89 ) (11 ) Separation costs (598 ) (797 ) — Defined benefit plan settlement charges — (225 ) — Impairment of data center assets — (136 ) — Gain on H3C and MphasiS divestitures 2,420 — — Interest and other, net (312 ) (51 ) (91 ) Tax indemnification adjustments 317 — — Loss from equity interests (76 ) (2 ) — Total Hewlett Packard Enterprise consolidated and combined earnings before taxes $ 4,079 $ 1,470 $ 2,244 Segment Assets Hewlett Packard Enterprise allocates assets to its business segments based on the segments primarily benefiting from the assets. Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated assets were as follows: As of October 31, 2016 2015 In millions Enterprise Group $ 26,163 $ 27,987 Enterprise Services 9,563 11,581 Software 9,425 9,996 Financial Services 13,594 13,163 Corporate Investments 161 83 Corporate and unallocated assets 20,773 17,106 Total Hewlett Packard Enterprise consolidated assets (1) $ 79,679 $ 79,916 _______________________________________________________________________________ (1) The Company elected to adopt the amendments prescribed by ASU 2015-17 related to deferred tax assets and liabilities in the first quarter of fiscal 2016 and applied them retrospectively, as required by the standard. The total assets by segment and total Hewlett Packard Enterprise consolidated assets for fiscal 2015 were restated accordingly. • Assets allocated to the EG segment in fiscal 2016 decreased as compared to fiscal 2015 due primarily to the divestiture of 51% of the Company's former H3C Technologies and China-based servers, storage and technology services businesses. • Assets allocated to the ES segment in fiscal 2016 decreased as compared to fiscal 2015 due primarily to the divestiture of the MphasiS business, the ongoing amortization of intangible assets and a decrease in prepaid expenses. • Assets allocated to the Software segment in fiscal 2016 decreased as compared to fiscal 2015 due primarily to the divestiture of the TippingPoint business and the ongoing amortization of intangible assets. • Assets allocated to the FS segment in fiscal 2016 increased as compared to fiscal 2015 due primarily to an increase in equipment leases to customers, recorded as operating and capital leases. • Assets allocated to the Corporate Investments segment in fiscal 2016 increased as compared to fiscal 2015 due primarily to the acquisition of equity method investments. • Assets allocated to Corporate and unallocated assets in fiscal 2016 increased as compared to fiscal 2015 due primarily to an increase in cash and cash equivalents, tax indemnification receivables as a result of the Separation and Distribution Agreement with HP Inc., and deferred tax assets. Major Customers No single customer represented 10% or more of Hewlett Packard Enterprise's total net revenue in any fiscal year presented. Geographic Information Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2016 , 2015 and 2014 , other than the U.S. and the United Kingdom, no country represented more than 10% of Hewlett Packard Enterprise's net revenue. Net revenue by country in which Hewlett Packard Enterprise operates was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. $ 19,581 $ 20,063 $ 20,833 United Kingdom 5,074 5,379 5,661 Other countries 25,468 26,665 28,629 Total net revenue $ 50,123 $ 52,107 $ 55,123 Net property, plant and equipment by country in which Hewlett Packard Enterprise operates was as follows: As of October 31, 2016 2015 In millions U.S. $ 4,768 $ 4,851 United Kingdom 912 955 Other countries 3,956 4,080 Total net property, plant and equipment $ 9,636 $ 9,886 Net revenue by segment and business unit was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions Servers $ 14,019 $ 14,219 $ 13,401 Technology Services 7,160 7,662 8,383 Storage 3,065 3,180 3,315 Networking 2,975 2,846 2,628 Enterprise Group 27,219 27,907 27,727 Infrastructure Technology Outsourcing 11,425 12,107 14,038 Application and Business Services 7,447 7,699 8,360 Enterprise Services 18,872 19,806 22,398 Software 3,195 3,622 3,933 Financial Services 3,190 3,216 3,498 Corporate Investments 3 7 4 Total segment net revenue 52,479 54,558 57,560 Eliminations of intersegment net revenue and other (2,356 ) (2,451 ) (2,437 ) Total net revenue $ 50,123 $ 52,107 $ 55,123 |
Restructuring
Restructuring | 12 Months Ended |
Oct. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring Summary of Restructuring Plans Restructuring charges of $1.2 billion and $1.0 billion were recorded by the Company during fiscal 2016 and 2015, respectively, based on restructuring activities impacting the Company's employees and infrastructure. Restructuring charges of $1.5 billion were recorded by the Company during fiscal 2014 based on restructuring activities impacting the Company's employees and infrastructure, as well as an allocation of restructuring charges related to former Parent's corporate and shared functional employees and infrastructure of $131 million . Restructuring activities related to the Company's employees and infrastructure (“Direct Restructuring”), summarized by plan, are presented in the table below: Fiscal 2015 Plan Fiscal 2012 Plan Other Plans Employee Infrastructure Employee Infrastructure Employee Infrastructure Total Liability as of $ — $ — $ 712 $ 37 $ 9 $ 120 $ 878 Charges — — 1,092 253 — (5 ) 1,340 Cash payments — — (978 ) (198 ) (1 ) (62 ) (1,239 ) Non-cash items — — (89 ) (1 ) — — (90 ) Liability as of — — 737 91 8 53 889 Charges 351 1 542 73 (4 ) (9 ) 954 Cash payments — (1 ) (884 ) (116 ) — (20 ) (1,021 ) Non-cash items — — (74 ) (3 ) (3 ) — (80 ) Liability as of 351 — 321 45 1 24 742 Charges 932 217 88 1 — (2 ) 1,236 Cash payments (615 ) (132 ) (263 ) (22 ) — (11 ) (1,043 ) Non-cash items (39 ) (50 ) (7 ) (1 ) — (1 ) (98 ) Liability as of $ 629 $ 35 $ 139 $ 23 $ 1 $ 10 $ 837 Total costs incurred to date as of October 31, 2016 $ 1,283 $ 218 $ 3,980 $ 546 $ 1,997 $ 1,127 $ 9,151 Total expected costs to be incurred as of October 31, 2016 $ 2,158 $ 451 $ 3,980 $ 546 $ 1,997 $ 1,127 $ 10,259 The current restructuring liability reported in Accrued restructuring in the Consolidated and Combined Financial Statements for fiscal 2016, 2015 and 2014 was $671 million , $628 million and $711 million , respectively. The non-current restructuring liability reported in Other liabilities in the Consolidated and Combined Financial Statements for fiscal 2016, 2015 and 2014 was $166 million , $114 million and $178 million , respectively. Fiscal 2015 Restructuring Plan On September 14, 2015, former Parent's Board of Directors approved a restructuring plan (the "2015 Plan") in connection with the Separation, which will be implemented through fiscal 2018. As of October 31, 2016, the Company expects up to approximately 30,000 employees to exit the Company by the end of 2018. The changes to the workforce will vary by country, based on local legal requirements and consultations with employee work councils and other employee representatives, as appropriate. As of October 31, 2016, the Company estimates that it will incur aggregate pre-tax charges of approximately $2.6 billion through fiscal 2018 in connection with the 2015 Plan, of which approximately $2.2 billion relates to workforce reductions and approximately $400 million primarily relates to real estate consolidation. On May 24, 2016, the Company announced plans for a tax-free spin-off and merger of its Enterprise Services business with Computer Sciences Corporation ("CSC"). The completion of the transaction will result in lower costs being incurred by the Company in connection with the 2015 Plan, the extent of which will depend on a number of factors including the exact closing date. Fiscal 2012 Restructuring Plan 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, 2015, the Company had eliminated 42,100 positions in connection with the 2012 Plan, with a portion of those employees exiting the Company as part of voluntary enhanced early retirement ("EER") programs in the U.S. and in certain other countries. As of October 31, 2016, the plan is substantially complete, with no further positions being eliminated. During fiscal 2016, the Company recorded severance charges of $88 million and infrastructure charges of $1 million , respectively, as a result of a change in the estimate of expected cash payouts. The Company recognized $4.5 billion in total aggregate charges in connection with the 2012 Plan, with approximately $4.0 billion related to workforce reductions, including the EER programs, and $546 million related to infrastructure, including data center and real estate consolidation and other items. The severance- and infrastructure-related cash payments associated with the 2012 Plan are expected to be paid out through fiscal 2021. Other Plans As of October 31, 2016, restructuring plans initiated by former Parent in fiscal 2008 and 2010 are substantially complete. Severance- and infrastructure-related cash payments associated with these plans are expected to be paid out through fiscal 2019. |
Retirement and Post-Retirement
Retirement and Post-Retirement Benefit Plans | 12 Months Ended |
Oct. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement and Post-Retirement Benefit Plans | Retirement and Post-Retirement Benefit Plans Defined Benefit Plans The Company sponsors defined benefit pension plans worldwide, the most significant of which are in the UK. There are three pension plans in the UK which are all closed to new entrants, but under which, members continue to earn benefit accruals. Two of these plans provide pension benefits to employees predominately within the Enterprise Services segment, the remaining plan provides pension benefits to employees within the remaining HPE segments. All of these plans provide benefits based on final pay and years of service and generally require contributions from members. These plans are accounted for as single employer benefit plans. The net benefit plan obligations and the related benefit plan expense for these plans have been recorded in the Company's Consolidated and Combined Financial Statements for fiscal 2016. Prior to October 31, 2015, and with the exception of certain defined benefit pension plans of which the Company was the sole sponsor, certain Hewlett Packard Enterprise eligible employees, retirees and other former employees participated in certain U.S. and international defined benefit pension plans offered by former Parent. These plans, which included participants of both Company employees and employees of former Parent, were accounted for as multiemployer benefit plans and the related net benefit plan obligations were not included in the Company's Combined and Consolidated Balance Sheets through July 31, 2015. The related benefit plan expense was allocated to the Company based on the Company's labor costs and allocations of corporate and other shared functional personnel. Former Parent contributions to these Shared plans were $518 million in fiscal 2015 and $277 million in fiscal 2014. In connection with the Separation, during the three months ended October 31, 2015, former Parent transferred plan assets and liabilities primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees to the Company. As a result, in the fourth quarter of fiscal 2015, plan assets of $11.7 billion , a benefit obligation of $11.9 billion and an accumulated other comprehensive loss of $2.6 billion , primarily related to non-U.S. defined benefit pension plans, were assumed and recorded by the Company. The net benefit plan obligations transferred were remeasured on the date of transfer resulting in an additional loss of $553 million recognized in Accumulated other comprehensive loss for the three months ended October 31, 2015. Post-Retirement Benefit Plans The Company sponsors retiree health and welfare benefit plans, the most significant of which is in the U.S. Generally, employees hired before August 2008 are eligible for employer credits under the Hewlett Packard Enterprise Retirement Medical Savings Account Plan (“RMSA”) upon attaining age 45. Employer credits to the RMSA available after September 2008 are provided in the form of matching credits on employee contributions made to a voluntary employee beneficiary association. Upon retirement, employees may use these employer credits for the reimbursement of certain eligible medical expenses. Prior to July 31, 2015, former Parent sponsored retiree health and welfare benefit plans, the most significant of which were in the U.S. All of these plans were accounted for as multiemployer benefit plans. The Company recognized post-retirement benefit credits of $28 million in fiscal 2015 and $18 million in fiscal 2014 in the Combined and Consolidated Statements of Earnings. In connection with the Separation, during the three months ended October 31, 2015, the former Parent transferred a benefit obligation of $150 million , plan assets of $40 million and accumulated other comprehensive income of $10 million , primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees to the Company. Defined Contribution Plans The Company offers various defined contribution plans for U.S. and non-U.S. employees. Prior to the Separation, former Parent offered various defined contribution plans for U.S. and non-U.S. employees. The Company's defined contribution expense was approximately $438 million in fiscal 2016, $450 million in fiscal 2015 and $480 million in fiscal 2014. Prior to the Separation, U.S. employees were automatically enrolled in the Hewlett-Packard Company 401(k) Plan ("HP 401(k) Plan") when they met eligibility requirements, unless they declined participation. The quarterly employer matching contributions in the HP 401(k) Plan were 100% of an employee's contributions, up to a maximum of 4% of eligible compensation. Effective November 1, 2015, the Company's active employees became eligible to participate in the newly created Hewlett Packard Enterprise Company 401(k) Plan. Effective January 1, 2017, the annual employer matching contributions in the updated HPE 401(k) Plan will be 50% of an employee's contributions, up to a maximum of 6% of eligible compensation. Prior to the amendment, the quarterly employer matching contributions in the HPE 401(k) Plan were 100% of an employee’s contributions, up to a maximum of 4% of eligible compensation. Pension Benefit Expense The Company's total net pension benefit cost recognized in the Consolidated and Combined Statements of Earnings was $140 million in fiscal 2016, $341 million in fiscal 2015 and $142 million in fiscal 2014. The amounts for fiscal 2015 and fiscal 2014 include $201 million and $6 million , respectively, of related benefit plan expenses that were allocated to the Company by former Parent for multiemployer pension plans. In January 2015, former Parent offered certain terminated vested participants of the U.S. HP Pension Plan (a Shared plan) a one-time voluntary window during which they could elect to receive their pension benefit as a lump sum payment. As a result, the former Parent pension plan trust made lump sum payments to eligible participants who elected to receive their pension benefit under this lump sum program. The defined benefit plan settlement charges of $225 million recorded in the Combined and Consolidated Statement of Earnings for the year ended October 31, 2015 primarily include settlement expenses and additional net periodic benefit costs resulting from this lump sum program incurred by former Parent, which was determined to be directly attributable to the Company, and the impact of the remeasurement of the related U.S. defined benefit plans. The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated and Combined Statements of Earnings for fiscal 2016, 2015 and 2014 are presented in the table below. In addition, the table includes costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015. For the fiscal years ended October 31, 2016 2015 2014 2016 2015 2014 2016 2015 2014 U.S. Defined Non-U.S. Defined Post-Retirement In millions Service cost $ — $ — $ — $ 254 $ 121 $ 74 $ 3 $ — $ — Interest cost — 16 15 549 337 283 6 1 — Expected return on plan assets — — — (983 ) (570 ) (364 ) (2 ) — — Amortization and deferrals: Actuarial loss — 2 2 311 218 82 (3 ) — — Prior service benefit — — — (24 ) (6 ) (2 ) — (1 ) — Net periodic benefit cost — 18 17 107 100 73 4 — — Curtailment gain — — — (5 ) — (1 ) — — — Settlement loss — — — 9 4 8 — — — Special termination benefits — — — 25 18 39 — — — Net benefit cost $ — $ 18 $ 17 $ 136 $ 122 $ 119 $ 4 $ — $ — The weighted-average assumptions used to calculate net pension benefit cost for Direct plans in fiscal 2016, 2015 and 2014 and for costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015 were as follows: For the fiscal years ended October 31, 2016 2015 2014 2016 2015 2014 2016 2015 2014 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans Discount rate 3.8 % 4.4 % 4.8 % 3.0 % 3.0 % 4.2 % 4.6 % 4.7 % — Expected increase in compensation levels 2.0 % — — 2.5 % 2.4 % 2.8 % — — — Expected long-term return on plan assets — — — 6.2 % 6.9 % 7.8 % 4.0 % — — Prior to October 31, 2016, the Company estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curves used to measure the benefit obligation. Beginning in fiscal 2017, the Company will change its method used to estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of defined benefit plans. The Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company will make this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of service and interest costs. The Company will account for this change as a change in estimate that is inseparable from a change in accounting principle and will account for it prospectively beginning in fiscal 2017. Funded Status The funded status of the plans was as follows: As of October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Non-U.S. Defined Post-Retirement In millions Change in fair value of plan assets: Fair value—beginning of year $ — $ — $ 16,624 $ 5,098 $ 40 $ — Transfer from former Parent (1) — — — 11,667 — 40 Acquisition/divestiture/addition/deletion of plans (2) — — 138 (4 ) — — Actual return on plan assets — — 2,104 512 1 — Employer contributions — 21 328 132 3 1 Participant contributions — — 41 7 6 — Benefits paid — (21 ) (518 ) (273 ) (3 ) (1 ) Settlement — — (33 ) (8 ) — — Currency impact — — (2,022 ) (507 ) — — Fair value—end of year — — 16,662 16,624 47 40 Change in benefit obligation: Projected benefit obligation—beginning of year 7 370 19,439 7,335 139 — Merged into former Parent's Shared plan (3) — (365 ) — — — — Transfer from former Parent (1) — 7 — 12,262 — 150 Acquisition/divestiture/addition/deletion of plans (2) — — (20 ) (3 ) — — Service cost — — 254 121 3 — Interest cost — 16 549 337 6 1 Participant contributions — — 41 7 6 — Actuarial loss (gain) — — 3,018 409 6 (10 ) Benefits paid — (21 ) (518 ) (273 ) (3 ) (1 ) Plan amendments — — 1 (82 ) — — Curtailment — — (18 ) — — — Settlement — — (33 ) (8 ) — — Special termination benefits — — 25 18 — — Currency impact — — (2,374 ) (684 ) 1 (1 ) Projected benefit obligation—end of year 7 7 20,364 19,439 158 139 Funded status at end of year $ (7 ) $ (7 ) $ (3,702 ) $ (2,815 ) $ (111 ) $ (99 ) Accumulated benefit obligation $ 7 $ 7 $ 19,829 $ 18,706 $ — $ — _______________________________________________________________________________ (1) In fiscal 2015, in connection with the Separation, former Parent transferred plan assets and liabilities from former Parent's shared plans to established Company plans. (2) Primarily attributable to a business divestiture of outsourcing services in Germany and a Netherlands plan data review that transferred HPI retirees to HPE. (3) In October 2015, the Company transferred three unfunded non-qualified U.S. defined benefit plans to HPI. The weighted-average assumptions used to calculate the projected benefit obligations were as follows: For the fiscal years ended October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans Discount rate 3.2 % 3.8 % 2.0 % 3.0 % 4.2 % 4.6 % Expected increase in compensation levels 2.0 % 2.0 % 2.4 % 2.5 % — — The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows: As of October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Non-U.S. Defined Post-Retirement In millions Noncurrent assets $ — $ — $ 378 $ 495 $ — $ — Current liabilities (2 ) (2 ) (43 ) (38 ) (3 ) (3 ) Noncurrent liabilities (5 ) (5 ) (4,037 ) (3,272 ) (108 ) (96 ) Funded status at end of year $ (7 ) $ (7 ) $ (3,702 ) $ (2,815 ) $ (111 ) $ (99 ) The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in Accumulated other comprehensive loss for the defined benefit plans: As of October 31, 2016 U.S. Defined Non-U.S. Defined Post-Retirement In millions Net actuarial loss (gain) $ — $ 5,800 $ (9 ) Prior service benefit — (184 ) — Total recognized in accumulated other comprehensive loss $ — $ 5,616 $ (9 ) The following table summarizes the net actuarial loss and prior service benefit for plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit) during the next fiscal year. As of October 31, 2016 U.S. Defined Non-U.S. Defined Post-Retirement In millions Net actuarial loss (gain) $ — $ 446 $ (3 ) Prior service benefit — (24 ) — Total expected to be recognized in net periodic benefit cost (credit) $ — $ 422 $ (3 ) Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows: As of October 31, 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans In millions Aggregate fair value of plan assets $ — $ — $ 10,508 $ 8,510 Aggregate projected benefit obligation $ 7 $ 7 $ 14,587 $ 11,820 Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows: As of October 31, 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans In millions Aggregate fair value of plan assets $ — $ — $ 10,171 $ 8,449 Aggregate accumulated benefit obligation $ 7 $ 7 $ 13,765 $ 11,195 Fair Value of Plan Assets The Company pays the U.S. defined benefit plan obligations when they come due since these plans are unfunded. The table below sets forth the fair value of non-U.S defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2016 and 2015. As of As of Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Asset Category: Equity securities U.S. $ 706 $ 34 $ — $ 740 $ 772 $ 65 — $ 837 Non-U.S. 1,022 227 84 1,333 1,910 408 68 2,386 Debt securities Corporate — 2,558 — 2,558 — 2,646 — 2,646 Government (1) — 805 — 805 — 843 — 843 Alternative investments Private Equity (2) — 4 68 72 — 1 68 69 Hybrids (3) — 458 — 458 — 2,576 — 2,576 Hybrids at NAV (4) 2,851 343 Hedge Funds (5) — 148 87 235 11 73 236 320 Common Contractual Funds at NAV (6) Equities at NAV 3,125 2,821 Fixed Income at NAV 948 993 Emerging Markets at NAV 955 844 Alternative investments at NAV 367 297 Real Estate Funds 215 269 307 791 447 33 571 1,051 Insurance Group Annuity Contracts — 38 63 101 — 48 69 117 Cash and Cash Equivalents (7) 1,061 — — 1,061 372 — — 372 Other (8) 71 69 122 262 61 13 35 109 Total $ 3,075 $ 4,610 $ 731 $ 16,662 $ 3,573 $ 6,706 $ 1,047 $ 16,624 _______________________________________________________________________________ (1) Includes debt issued by national, state and local governments and agencies. (2) Includes limited partnerships such as equity, buyout, venture capital, real estate, and other similar funds that invest in the U.S. and internationally where foreign currencies are hedged. (3) Includes a fund that invests in both private and public equities primarily in the U.S. and the United Kingdom, as well as emerging markets across all sectors. The fund also holds fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the fund includes units in transferable securities, collective investment schemes, money market funds, cash, and deposits. (4) Includes pooled funds that invest: a. in government bonds and derivative instruments such as interest rate swaps, future contracts and repurchase agreements with the objective to provide nominal and/or inflation-linked returns ( $2,478 million and $0 million at October 31, 2016 and 2015, respectively); b. in various worldwide equity index funds with the objective to provide returns that are consistent with the FTSE All World Developed Index ( $373 million and $343 million at October 31, 2016 and 2015, respectively). While the funds are not publicly traded, the custodian strikes a net asset value at least monthly. There are no redemption restrictions or future commitments on these investments. (5) Includes limited partnerships that invest both long and short primarily in common stocks and credit, relative value, event driven equity, distressed debt and macro strategies. Management of the hedge funds has the ability to shift investments from value to growth strategies, from small to large capitalization stocks and bonds, and from a net long position to a net short position. (6) HP Invest Common Contractual Fund (CCF) is an investment arrangement in which institutional investors pool their assets. Units may be acquired in six different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund’s investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments. (7) Includes cash and cash equivalents such as short-term marketable securities. (8) Includes international insured contracts, derivative instruments and unsettled transactions. Post-retirement benefit plan assets of $47 million and $40 million as of October 31, 2016 and 2015, respectively, were invested in publicly traded registered investment entities and were classified within Level 1 of the fair value hierarchy. Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows: Fiscal year ended October 31, 2016 Alternative Equity Private Hedge Real Insurance Other Total In millions Balance at beginning of year $ 68 $ 68 $ 236 $ 571 $ 69 $ 35 $ 1,047 Actual return on plan assets: Relating to assets held at the reporting date 16 (1 ) (35 ) (96 ) (2 ) (1 ) (119 ) Relating to assets sold during the period — 4 — — (3 ) — 1 Purchases, sales, and settlements — (3 ) (11 ) 2 (3 ) 82 67 Transfers in and/or out of Level 3 — — (103 ) (170 ) 2 6 (265 ) Balance at end of year $ 84 $ 68 $ 87 $ 307 $ 63 $ 122 $ 731 Fiscal year ended October 31, 2015 Alternative Equity Private Hedge Real Insurance Other Total In millions Balance at beginning of year $ — $ 28 $ — $ 336 $ 5 $ — $ 369 Transfer from former Parent (1) 81 19 192 23 58 34 407 Actual return on plan assets: Relating to assets held at the reporting date (13 ) (1 ) 7 23 4 1 21 Relating to assets sold during the period — 5 — — — — 5 Purchases, sales, and settlements — 10 36 15 — — 61 Transfers in and/or out of Level 3 — 7 1 174 2 — 184 Balance at end of year $ 68 $ 68 $ 236 $ 571 $ 69 $ 35 $ 1,047 ______________________________________________________________________________ (1) In connection with the Separation, former Parent transferred plan assets from former Parent's shared plans to established Company plans. During the period ended October 31, 2016, the Company adopted the amendment to the existing accounting standards for fair value measurements issued by the FASB in May 2015, and elected to apply it on a retrospective basis. This ASU removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share as a practical expedient. See Note 1, "Overview and Basis of Presentation", for more details. The following is a description of the valuation methodologies used to measure plan assets at fair value. Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. For corporate and government debt securities traded on active exchanges, fair value is based on observable quoted prices. The valuation of alternative investments, such as limited partnerships and joint ventures, may require significant management judgment. For alternative investments, valuation is based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. Depending on the amount of management judgment, the lack of near-term liquidity, and the absence of quoted market prices, these assets are classified in Level 2 or Level 3 of the fair value hierarchy. Further, depending on how quickly the Company can redeem its hedge fund investments, and the extent of any adjustments to fair value, hedge funds are classified in either Level 2 or Level 3 of the fair value hierarchy. The valuation for some of these assets requires judgment due to the absence of quoted market prices, and these assets are generally classified in either Level 2 or Level 3 of the fair value hierarchy. Cash and cash equivalents includes money market funds, which are valued based on cost, which approximates fair value. Other assets, including insurance group annuity contracts, were classified in the fair value hierarchy based on the lowest level input (e.g., quoted prices and observable inputs) that is significant to the fair value measure in its entirety. Plan Asset Allocations The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans and post-retirement benefit plan were as follows: Non-U.S. Defined Post-Retirement Plan Assets Plan Assets Asset Category 2016 2016 2015 2016 2016 2015 Public equity securities 38.3 % 43.4 % — — Private/other equity securities 22.5 % 19.8 % — — Real estate and other 6.3 % 7.0 % — — Equity-related investments 64.7 % 67.1 % 70.2 % — — — Debt securities 34.5 % 26.5 % 27.6 % 90.0 % 90.2 % 97.2 % Cash and cash equivalents 0.8 % 6.4 % 2.2 % 10.0 % 9.8 % 2.8 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Investment Policy The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans' investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans' investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures. Outside the U.S., asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees for the specific plan. Basis for Expected Long-Term Rate of Return on Plan Assets The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country's specific inflation outlook. Because the Company's investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees. Future Contributions and Funding Policy In fiscal 2017, the Company expects to contribute approximately $348 million to its non-U.S. pension plans. In addition, the Company expects to contribute approximately $2 million to cover benefit payments to U.S. non-qualified plan participants. The Company expects to pay approximately $3 million to cover benefit claims for its post-retirement benefit plans. These amounts do not include pension funding the Company is obligated to make related to the spin-off and merger of the Enterprise Services business with CSC. The Company's policy is to fund its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities. In connection with the Company’s plan for a tax-free spin-off and merger of its Enterprise Services business with CSC, there will be a transfer of unfunded pension liabilities for certain pension plans to the Company’s Enterprise Services business. As of October 31, 2016, the transfer is targeted to be completed on or around April 1, 2017. The approximate net pension liability to be transferred is pursuant to the transaction agreements, wherein the Company is obligated to fund the transferred net pension liability in excess of $570 million . The Company currently estimates the total funding amount to be in the range of $2.0 billion to $3.0 billion . While the exact amount will not be known until the transaction completion date, in December 2016 the Company made initial funding payments of $1.9 billion . Estimated Future Benefits Payments As of October 31, 2016, estimated future benefits payments for the Company's retirement plans were as follows: Fiscal year U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans In millions 2017 $ 2 $ 527 $ 4 2018 — 505 5 2019 1 542 6 2020 — 579 7 2021 1 608 8 Next five fiscal years to October 31, 2026 2 3,515 54 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Prior to the Separation, certain of the Company's employees participated in stock-based compensation plans sponsored by former Parent. Former Parent's stock-based compensation plans included incentive compensation plans ("former Parent's Plan") and an employee stock purchase plan ("former Parent's ESPP"). All awards granted under the plans were based on former Parent's common shares and, as such, the award activity is not reflected in the Company's Consolidated and Combined Financial Statements. For the fiscal years ended October 31, 2015 and 2014, stock-based compensation expense includes expense attributable to the Company based on the awards and terms previously granted under the incentive compensation plan to the Company's employees and an allocation of former Parent's corporate and shared functional employee expenses. Accordingly, the amounts presented for fiscal 2015 and 2014 are not necessarily indicative of future awards and do not necessarily reflect the results that the Company would have experienced as an independent, publicly-traded company. The share and per share data for fiscal 2015 and 2014 presented in this note has not been adjusted to reflect the impact of the Separation. In conjunction with the Separation, the Company adopted the Hewlett Packard Enterprise Company 2015 Stock Incentive Plan (the "Plan") and the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan (the “ESPP”). The Plan and the ESPP became effective November 1, 2015. The total number of shares of the Company’s common stock authorized under the Plan and the ESPP was 260 million and 80 million , respectively. The Plan provides for the grant of various types of awards including restricted stock awards, stock options, and performance-based awards. In connection with the Separation and in accordance with the Employee Matters Agreement between HP Inc. and the Company, the Company's employees with outstanding former Parent stock-based awards received replacement stock-based awards under the Plan at Separation. The value of the replacement stock-based awards was designed to generally preserve the intrinsic value of the replaced awards immediately prior to the Separation. The incremental expense incurred by the Company was not material. Also in conjunction with the Separation, the Company granted one-time retention stock awards to certain executives, with a total grant date fair value of approximately $137 million . These awards vest over three years from the grant date. Stock-Based Compensation Expense and Related Income Tax Benefits Stock-based compensation expense and the resulting tax benefits recognized by the Company were as follows: Fiscal years ended October 31, 2016 2015 2014 In millions Stock-based compensation expense $ 597 $ 565 $ 427 Income tax benefit (181 ) (165 ) (141 ) Stock-based compensation expense, net of tax $ 416 $ 400 $ 286 In May 2016, in connection with the announcement of the spin-off and merger of the Company's Enterprise Services business with CSC, the Company modified its stock-based compensation program such that certain unvested equity awards outstanding on May 24, 2016 will vest upon the earlier of: (i) the termination of an employee’s employment with HPE as a direct result of an announced sale, divestiture or spin-off of a subsidiary, division or other business; (ii) the termination of an employee’s employment by HPE without cause; or (iii) June 1, 2018. This modification also includes changes to the performance and market conditions of certain performance-based awards. As a result, for the year ended October 31, 2016, stock-based compensation expense in the table above includes pre-tax expense of $31 million , which has been recorded within Separation costs in the Consolidated and Combined Statements of Earnings. Additionally, for the year ended October 31, 2016, stock-based compensation expense in the table above includes pre-tax expense of $8 million related to workforce reductions, which has been recorded within Restructuring charges in the Consolidated and Combined Statements of Earnings. In connection with the Separation, former Parent's Board of Directors approved amendments to certain outstanding long-term incentive awards on July 29, 2015. The amendments provided for the accelerated vesting on September 17, 2015 of certain stock-based awards that were otherwise scheduled to vest between September 18, 2015 and December 31, 2015. The incremental pre-tax stock-based compensation expense due to the acceleration was approximately $61 million in fiscal 2015. Stock-based compensation expense includes an allocation of former Parent's corporate and shared functional employee expenses of $151 million and $113 million in fiscal 2015 and 2014, respectively. Cash received from option exercises and purchases under the Company's ESPP was $119 million in fiscal 2016. The benefit realized for the tax deduction from option exercises in fiscal 2016 was $21 million . Cash received from option exercises and purchases by Company employees under former Parent's ESPP was $165 million in fiscal 2015 and $154 million in fiscal 2014. The benefit realized for the tax deduction from option exercises in fiscal 2015 and 2014 was $45 million and $42 million , respectively. Restricted Stock Awards Restricted stock awards are unvested stock awards that may include grants of restricted stock or restricted stock units. Restricted stock awards and cash-settled awards are generally subject to forfeiture if employment terminates prior to the lapse of the restrictions. Such awards generally vest one to three years from the date of grant. During the vesting period, ownership of the restricted stock cannot be transferred. Restricted stock has the same dividend and voting rights as common stock and is considered to be issued and outstanding upon grant. The dividends paid on restricted stock are non-forfeitable. Restricted stock units have forfeitable dividend equivalent rights equal to the dividend paid on common stock. Restricted stock units do not have the voting rights of common stock, and the shares underlying restricted stock units are not considered issued and outstanding upon grant. The fair value of the restricted stock awards is the close price of the Company's common stock on the grant date of the award. The Company expenses the fair value of restricted stock awards ratably over the period during which the restrictions lapse. For fiscal 2016, the activity summarized in the table below is related to restricted stock held by Company employees under the Plan. For fiscal 2015 and 2014, the activity summarized in the table below is related to restricted stock held by Company employees under former Parent's Plans. Fiscal years ended October 31, 2016 2015 2014 Shares Weighted- Shares Weighted- Shares Weighted- In thousands In thousands In thousands Outstanding at beginning of year — $ — 24,496 $ 24 18,170 $ 20 Converted from former Parent's plan 42,012 $ 15 — $ — — $ — Granted and assumed through acquisition (1) 32,752 $ 15 19,601 $ 35 15,820 $ 28 Vested (12,747 ) $ 15 (21,860 ) $ 26 (7,893 ) $ 24 Forfeited (4,696 ) $ 15 (1,819 ) $ 30 (1,601 ) $ 22 Employee transition (2) — $ — 3,982 $ 33 — $ — Outstanding at end of year 57,321 $ 15 24,400 $ 32 24,496 $ 24 ________________________________________________________________________ (1) Includes a one-time restricted stock unit retention grant of approximately 5 million shares in fiscal 2016. (2) The Employee transition amounts consist of restricted stock award activity for employees transitioning between the Company and former Parent. In fiscal 2015, approximately 8 million shares of restricted stock units were assumed through acquisition with a weighted-average grant date fair value of $33 per share. The total grant date fair value of restricted stock awards vested for Company employees in fiscal 2016, 2015 and 2014 was $130 million , $451 million and $128 million , respectively, net of taxes. As of October 31, 2016, there was $463 million of unrecognized pre-tax stock-based compensation expense related to unvested restricted stock awards, which the Company expects to recognize over the remaining weighted-average vesting period of 1.2 years . Stock Options Stock options granted under the Company's principal equity plans are generally non-qualified stock options, but the principal equity plans permitted some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. Stock options generally vest over three to four years from the date of grant. The exercise price of a stock option is equal to the closing price of the Company's common stock on the option grant date. The majority of the stock options issued by the Company contain only service vesting conditions. The Company also issued, to a lesser extent, performance-contingent stock options that vest only on the satisfaction of both service and market conditions. The Company and former Parent utilize the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The Company and former Parent estimate the fair value of stock options subject to performance-contingent vesting conditions using a combination of a Monte Carlo simulation model and a lattice model, as these awards contain market conditions. The weighted-average fair value and the assumptions used to measure fair value were as follows: Fiscal years ended October 31, 2016 2015 2014 Weighted-average fair value (1) $ 4 $ 8 $ 7 Expected volatility (2) 31.1 % 26.8 % 33.1 % Risk-free interest rate (3) 1.7 % 1.7 % 1.8 % Expected dividend yield (4) 1.5 % 1.8 % 2.1 % Expected term in years (5) 5.4 5.9 5.7 _______________________________________________________________________________ (1) For fiscal 2016, the weighted-average fair value was based on stock options granted under the Plan during the period. For fiscal 2015 and 2014, the weighted-average fair value was based on stock options granted under former Parent's Plan during the respective periods. (2) For options granted in fiscal 2016, expected volatility was estimated using the average historical volatility of selected peer companies. For options granted in fiscal 2015, expected volatility was estimated using the implied volatility derived from options traded on former Parent's common stock. For options granted in fiscal 2014, expected volatility for options subject to service-based vesting was estimated using the implied volatility derived from options traded on former Parent's common stock, whereas for performance-contingent options, expected volatility was estimated using the historical volatility of former Parent's common stock. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the option. (5) For options granted in fiscal 2016 subject to service-based vesting, the expected term was estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 110. For options granted in fiscal 2015 and 2014 subject to service-based vesting, the expected term was estimated using historical exercise and post-vesting termination patterns. For performance-contingent options, the expected term represents an output from the lattice model. For fiscal 2016, the activity summarized in the table below is related to stock options held by Company employees under the Plan. For fiscal 2015 and 2014, the activity summarized in the table below is related to stock options held by Company employees under former Parent's Plan. Fiscal years ended October 31, 2016 2015 2014 Shares Weighted- Weighted- Aggregate Shares Weighted- Weighted- Aggregate Shares Weighted- Weighted- Aggregate In thousands In years In millions In thousands In years In millions In thousands In years In millions Outstanding — $ — 24,472 $ 27 37,433 $ 26 Converted from former Parent's plan 42,579 $ 15 — $ — — $ — Granted and assumed through acquisitions (1) 25,390 $ 15 3,147 $ 37 4,255 $ 28 Exercised (7,845 ) $ 11 (5,716 ) $ 18 (5,533 ) $ 18 Forfeited/cancelled/expired (2,626 ) $ 20 (7,116 ) $ 40 (11,683 ) $ 37 Employee transition (2) — $ — 11,391 $ 26 — $ — Outstanding 57,498 $ 15 5.4 $ 437 26,178 $ 26 5.2 $ 115 24,472 $ 27 4.2 $ 272 Vested and expected to 55,716 $ 15 5.3 $ 425 25,309 $ 26 5.2 $ 115 23,152 $ 27 4.0 $ 252 Exercisable at end of year 26,204 $ 13 3.8 $ 241 18,767 $ 23 4.7 $ 109 14,174 $ 31 2.5 $ 119 _______________________________________________________________________________ (1) Includes one-time stock option retention grant of approximately 16 million shares in fiscal 2016. (2) Employee transition amounts consist of option activity for employees transitioning between the Company and former Parent. The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that Company employee option holders would have realized had all option holders exercised their options on the last trading day of fiscal 2016, 2015 and 2014. For fiscal 2016, the aggregate intrinsic value is the difference between the Company's closing common stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options. For fiscal 2015 and 2014, the aggregate intrinsic value is the difference between former Parent's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options. The total intrinsic value of options exercised in fiscal 2016, 2015 and 2014 was $62 million , $94 million and $78 million , respectively. The total grant date fair value of options granted which vested in fiscal 2016, 2015 and 2014 was $18 million , $38 million and $46 million , respectively, net of taxes. The following table summarizes significant ranges of outstanding and exercisable stock options: As of October 31, 2016 Options Outstanding Options Exercisable Range of Exercise Prices Shares Weighted- Weighted- Shares Weighted- In thousands In years In thousands $0-$9.99 7,321 3.7 $ 8 8,905 $ 8 $10-$19.99 39,881 5.7 $ 15 13,289 $ 14 $20-$29.99 10,296 5.2 $ 21 4,010 $ 22 57,498 5.4 $ 15 26,204 $ 13 As of October 31, 2016, there was $58 million of unrecognized pre-tax stock-based compensation expense related to stock options, which the Company expects to recognize over the remaining weighted-average vesting period of 1.8 years . Employee Stock Purchase Plan The ESPP allows eligible employees to contribute up to 10% of their eligible compensation to purchase Hewlett Packard Enterprise's common stock. The ESPP provides for a discount not to exceed 15% and an offering period up to 24 months . The Company currently offers 6 month offering periods during which employees have the ability to purchase shares at 95% of the closing market price on the purchase date. No stock-based compensation expense was recorded in connection with those purchases, as the criteria of a non-compensatory plan were met. Prior to the Separation, former Parent sponsored the ESPP, pursuant to which eligible employees could contribute up to 10% of their eligible compensation, subject to certain income limits, to purchase shares of former Parent's common stock. Pursuant to the terms of the ESPP, employees purchased stock under the ESPP at a price equal to 95% of former Parent's closing stock price on the purchase date. No stock-based compensation expense was recorded in connection with those purchases because the criteria of a non-compensatory plan were met. |
Taxes on Earnings
Taxes on Earnings | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Taxes on Earnings | Taxes on Earnings Prior to the Separation, Hewlett Packard Enterprise's operating results were included in former Parent's various consolidated U.S. federal and state income tax returns, as well as non-U.S. tax filings. For the purposes of the Company's Consolidated and Combined Financial Statements for periods prior to the Separation, income tax expense and deferred tax balances have been recorded as if the Company filed tax returns on a standalone basis separate from former Parent. The Separate Return Method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise for fiscal 2015 and prior. Provision for Taxes The domestic and foreign components of earnings before taxes were as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. $ (368 ) $ 192 $ 878 Non-U.S. 4,447 1,278 1,366 $ 4,079 $ 1,470 $ 2,244 The provision for (benefit from) taxes on earnings were as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. federal taxes: Current $ 1,133 $ 1,647 $ 481 Deferred (1,162 ) (3,508 ) (460 ) Non-U.S. taxes: Current 1,085 492 375 Deferred 35 527 197 State taxes: Current 72 47 45 Deferred (245 ) (196 ) (42 ) $ 918 $ (991 ) $ 596 The differences between the U.S. federal statutory income tax rate and the Company's effective tax rate were as follows: For the fiscal years ended October 31, 2016 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit (0.4 )% 14.1 % 2.4 % Lower rates in other jurisdictions, net (26.8 )% (53.6 )% (9.6 )% Valuation allowance (5.8 )% (75.7 )% 3.2 % Uncertain tax positions 23.7 % 5.8 % (0.7 )% Other, net (3.2 )% 7.0 % (3.7 )% 22.5 % (67.4 )% 26.6 % The jurisdictions with favorable tax rates that had the most significant impact on the Company's effective tax rate in the periods presented include Puerto Rico, China and Singapore. The Company plans to reinvest earnings of these jurisdictions indefinitely outside the U.S., and therefore has not provided for U.S. taxes on those indefinitely reinvested earnings. In fiscal 2016, the Company recorded $249 million of net income tax charges related to items unique to the year. These amounts primarily included $714 million of income tax charges related to pre-Separation tax matters, of which $647 million is related to the effect of the potential settlement of certain pre-Separation Hewlett-Packard Company income tax liabilities, and $169 million of income tax charges resulting from a gain on H3C divestiture, the effects of which were partially offset by $270 million of income tax benefits on Acquisition and other related charges, and Separation costs, $212 million of income tax benefits on restructuring charges, and $124 million of income tax benefits resulting from a gain on MphasiS divestiture. In fiscal 2015, the Company recorded $1.6 billion of net income tax benefits related to items unique to the year. These amounts primarily included $1.8 billion of income tax benefits due to the release of valuation allowances pertaining to certain U.S. deferred tax assets, $447 million of income tax benefits related to restructuring and Separation-related costs, and $131 million of income tax benefits related to uncertain tax positions, the effects of which were partially offset by $486 million of tax charges to record valuation allowances on certain foreign deferred tax assets and $217 million of income tax charges related to state tax impacts of the separation of deferred taxes under the Separate Return Method. In fiscal 2014, the Company recorded $113 million of net income tax benefits related to items unique to the year. These amounts included $66 million of income tax benefits related to provision to return adjustments and $35 million of income tax benefits related to state rate changes. As a result of certain employment actions and capital investments the Company has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, through 2024. The gross income tax benefits attributable to these actions and investments were estimated to be $401 million ( $0.23 diluted net EPS) in fiscal 2016, $260 million ( $0.14 diluted net EPS) in fiscal 2015 and $546 million ( $0.30 diluted net EPS) in fiscal 2014. For comparative purposes, the number of shares used to compute the diluted net EPS as of October 31, 2015 is used for calculation of diluted net EPS as of October 31, 2014. Refer Note 16, "Net Earnings Per Share" for details on shares used to compute diluted net EPS. A reconciliation of unrecognized tax benefits is as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 4,901 $ 2,067 $ 1,925 Increases: For current year's tax positions 1,481 1,449 273 For prior years' tax positions 863 3,591 533 Net transfers from former Parent through equity 4,540 — — Decreases: For prior years' tax positions (115 ) (554 ) (328 ) Statute of limitations expiration (47 ) (12 ) (121 ) Settlements with taxing authorities (73 ) (54 ) (215 ) Net transfers to former Parent through equity — (1,586 ) — Balance at end of year $ 11,550 $ 4,901 $ 2,067 Up to $3.1 billion , $0.6 billion and $1.4 billion of Hewlett Packard Enterprise's unrecognized tax benefits at October 31, 2016, 2015 and 2014, respectively, would affect the Company's effective tax rate if realized. The $6.6 billion increase in the amount of unrecognized tax benefits for the year ended October 31, 2016, is primarily related to certain pre-Separation income tax liabilities for which the Company is joint and severally liable under the Tax Matters Agreement entered in to with HP Inc. effective November 1, 2015, as well as the unrecognized tax benefits related to the timing of intercompany royalty revenue recognition, which does not affect the Company's effective tax rate. For fiscal 2015 and prior, the unrecognized tax benefits reflected in the Company's Consolidated and Combined Financial Statements have been determined using the Separate Return Method. The $2.8 billion increase in the amount of unrecognized tax benefits for the year ended October 31, 2015, primarily relates to the timing of intercompany royalty revenue recognition, which does not affect the Company’s effective tax rate. Hewlett Packard Enterprise recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Provision for taxes in the Consolidated and Combined Statements of Earnings. The Company had accrued $423 million and $269 million for interest and penalties as of October 31, 2016 and 2015, respectively. Hewlett Packard Enterprise engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. Hewlett Packard Enterprise does not expect complete resolution of any U.S. Internal Revenue Service ("IRS") audit cycle within the next 12 months . However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months , including resolution of certain intercompany transactions, joint and several tax liabilities and other matters. Accordingly, Hewlett Packard Enterprise believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $2.5 billion within the next 12 months. Hewlett Packard Enterprise is subject to income tax in the U.S. and approximately 110 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. Revenue Agent Reports (“RAR”) have been received from the IRS for tax years 2005 - 2009 related to the Company's U.S. Enterprise Services subsidiaries, proposing total tax deficiencies of $336 million . HPE is contesting certain of these issues. The IRS is also conducting an audit of the 2010 tax return and a limited audit of the 2011 and 2012 amended income tax returns for the Company’s U.S. Enterprise Services subsidiaries. With respect to major foreign tax jurisdictions, HPE is no longer subject to tax authority examinations for years prior to 2005. HPE is subject to a foreign tax audit concerning an intercompany transaction for fiscal 2009. The relevant taxing authority has proposed an assessment of approximately $743 million . HPE is contesting this proposed assessment. With respect to major state tax jurisdictions, HPE is no longer subject to tax authority examinations for years prior to 2003. Hewlett Packard Enterprise believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows. Hewlett Packard Enterprise is joint and severally liable for certain pre-Separation tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by federal, state and foreign tax authorities. The IRS is conducting an audit of former Parent’s 2009 - 2014 income tax returns. HP Inc. has received from the IRS Notices of Deficiency for its fiscal 1999 - 2000 and 2003 - 2005 tax years, and RARs for its fiscal 2001 - 2002 and 2006 - 2008 tax years. Hewlett Packard Enterprise has not provided for U.S. federal income and foreign withholding taxes on $26.2 billion of undistributed earnings from non-U.S. operations as of October 31, 2016 because the Company intends to reinvest such earnings indefinitely outside of the U.S. If the Company were to distribute these earnings, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. The Company will remit non-indefinitely reinvested earnings of its non-U.S. subsidiaries for which deferred U.S. federal and withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons. Deferred Income Taxes Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. For the purposes of the Company's Consolidated and Combined Balance Sheets in the period prior to the Separation, deferred tax balances and tax carryforwards and credits have been recorded under the Separate Return Method. The deferred tax balances reflected in the Company's Consolidated Balance Sheets in the period prior to the Separation have been recorded on a consolidated return basis and include tax attributes allocated to the Company at the time of the Separation. The inclusion of these tax attributes resulted in tax carryforwards and credits, which generated higher deferred income tax assets for the Company in the period prior to the Separation. The significant components of deferred tax assets and deferred tax liabilities were as follows: As of October 31, 2016 2015 Deferred Deferred Deferred Deferred In millions Loss and credit carryforwards $ 1,859 $ (26 ) $ 1,706 $ — Unremitted earnings of foreign subsidiaries — (3,708 ) — (3,362 ) Inventory valuation 94 (1 ) 97 (24 ) Intercompany transactions—royalty prepayments 5,237 — 5,598 — Intercompany transactions—excluding royalty prepayments 160 — 190 (14 ) Fixed assets 128 (128 ) 327 (362 ) Warranty 164 — 171 (2 ) Employee and retiree benefits 1,655 (65 ) 772 (48 ) Accounts receivable allowance 32 — 38 (9 ) Intangible assets 53 (176 ) — (349 ) Restructuring 258 — 210 — Deferred revenue 968 (3 ) 1,152 (196 ) Other 436 — 241 — Gross deferred tax assets and liabilities 11,044 (4,107 ) 10,502 (4,366 ) Valuation allowance (2,650 ) — (2,252 ) — Net deferred tax assets and liabilities $ 8,394 $ (4,107 ) $ 8,250 $ (4,366 ) In the first quarter of fiscal 2016, the Company adopted the amendment to the existing accounting standards for income taxes issued by the FASB in November 2015, and elected to apply it on a retrospective basis. As a result, all of the Company's deferred tax assets and liabilities are classified as non-current as of October 31, 2016 and retrospectively as of October 31, 2015. See Note 1, "Overview and Summary of Significant Accounting Policies", for more details. Deferred tax assets and liabilities included in the Consolidated Balance Sheets are as follows: As of October 31, 2016 2015 In millions Deferred tax assets $ 4,430 $ 3,925 Deferred tax liabilities (143 ) (41 ) Deferred tax assets net of deferred tax liabilities $ 4,287 $ 3,884 The Company periodically engages in intercompany advanced royalty payment and licensing arrangements that may result in advance payments between subsidiaries in different tax jurisdictions. When the local tax treatment of the intercompany licensing arrangements differs from U.S. GAAP treatment, deferred taxes are recognized. Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $3.7 billion and $5.0 billion during fiscal 2016 and 2015, respectively. In these transactions, the payments were received in the U.S. from a foreign consolidated affiliate, with a deferral of intercompany revenues over the term of the arrangements, approximately 5 years . Intercompany royalty revenue and the amortization expense related to the licensing rights are eliminated in consolidation. As of October 31, 2016, the Hewlett Packard Enterprise had $51 million , $1.9 billion and $6.0 billion of federal, state and foreign net operating loss carryforwards, respectively. Amounts included in state and foreign net operating loss carryforwards will begin to expire in 2017 and amounts included in federal net operating loss carryforwards will begin to expire in 2030. Hewlett Packard Enterprise has provided a valuation allowance of $38 million and $1.2 billion for deferred tax assets related to state and foreign net operating losses carryforwards, respectively. As of October 31, 2016, Hewlett Packard Enterprise had recorded deferred tax assets for various tax credit carryforwards as follows: Carryforward Valuation Initial In millions U.S. foreign tax credits $ 291 $ — 2021 U.S. research and development and other credits 99 — 2019 Tax credits in state and foreign jurisdictions 205 (160 ) 2019 Balance at end of year $ 595 $ (160 ) Deferred Tax Asset Valuation Allowance The deferred tax asset valuation allowance and changes were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 2,252 $ 3,912 $ 3,194 Income tax expense (235 ) (1,155 ) 198 Other comprehensive income, currency translation and charges to other accounts 633 (505 ) 520 Balance at end of year $ 2,650 $ 2,252 $ 3,912 Total valuation allowances increased by $398 million in fiscal 2016, due primarily to the valuation allowance against foreign deferred tax assets related to pension assets and liabilities, partially offset by decreases in foreign deferred tax assets for net operating losses. Total valuation allowances decreased by $1.7 billion in fiscal 2015 due primarily to the release of a valuation allowance against deferred tax assets in the U.S. Tax Matters Agreement and Other Income Tax Matters In connection with the Separation, the Company entered into a Tax Matters Agreement with HP Inc., formerly Hewlett-Packard Company. See Note 18, "Guarantees, Indemnifications and Warranties", for a full description of the Tax Matters Agreement. |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Oct. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Details | Balance Sheet Details Balance sheet details were as follows: Accounts Receivable, Net As of October 31, 2016 2015 In millions Unbilled receivable $ 1,086 $ 1,396 Accounts receivable 5,907 7,251 Allowance for doubtful accounts (84 ) (109 ) Total $ 6,909 $ 8,538 The allowance for doubtful accounts related to accounts receivable and changes therein were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 109 $ 126 $ 150 Provision for doubtful accounts 52 27 50 Deductions, net of recoveries (77 ) (44 ) (74 ) Balance at end of year $ 84 $ 109 $ 126 The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. The recourse obligations associated with these short-term financing arrangements as of October 31, 2016 and 2015 were not material. The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of period (1) $ 68 $ 188 $ 70 Trade receivables sold 3,015 4,221 3,947 Cash receipts (2,931 ) (4,327 ) (3,815 ) Foreign currency and other (7 ) (14 ) (14 ) Balance at end of period (1) $ 145 $ 68 $ 188 _______________________________________________________________________________ (1) Beginning and ending balances represent amounts for trade receivables sold but not yet collected. Inventory As of October 31, 2016 2015 In millions Finished goods $ 1,202 $ 1,518 Purchased parts and fabricated assemblies 572 680 Total $ 1,774 $ 2,198 For the fiscal year ended October 31, 2016 , the change in inventory was due primarily to the removal of approximately $200 million of inventory as a result of the divestiture of H3C and lower EG inventory to support service levels. Other Current Assets As of October 31, 2016 2015 In millions Value-added taxes receivable $ 1,060 $ 1,538 Manufacturer and other receivables 1,057 1,992 Prepaid and other current assets 2,207 2,938 Total $ 4,324 $ 6,468 Property, Plant and Equipment As of October 31, 2016 2015 In millions Land $ 497 $ 514 Buildings and leasehold improvements 6,948 6,924 Machinery and equipment, including equipment held for lease 14,300 13,986 21,745 21,424 Accumulated depreciation (12,109 ) (11,538 ) Total $ 9,636 $ 9,886 Depreciation expense was $3.0 billion , $3.1 billion and $3.2 billion in fiscal 2016 , 2015 and 2014 , respectively. The change in gross property, plant and equipment was due primarily to purchases of $3.4 billion , partially offset by sales and retirements of $2.8 billion , the removal of certain property, plant and equipment as result of the divestitures of H3C and MphasiS of $251 million and unfavorable currency fluctuations of $114 million . Accumulated depreciation associated with the assets sold and retired was $2.3 billion . Long-Term Financing Receivables and Other Assets As of October 31, 2016 2015 In millions Financing receivables, net $ 3,938 $ 3,642 Deferred tax assets 4,430 3,925 Deferred costs - long-term 822 715 Other 4,026 2,593 Total $ 13,216 $ 10,875 Other Accrued Liabilities As of October 31, 2016 2015 In millions Accrued taxes - other $ 1,297 $ 1,364 Warranty 258 276 Sales and marketing programs 858 908 Other 2,578 3,766 Total $ 4,991 $ 6,314 Other Liabilities As of October 31, 2016 2015 In millions Pension, post-retirement, and post-employment liabilities $ 4,230 $ 3,432 Deferred revenue - long-term 3,408 3,565 Deferred tax liability 143 41 Tax liability - long-term 4,057 778 Other long-term liabilities 1,184 1,086 Total $ 13,022 $ 8,902 For the fiscal year ended October 31, 2016 , the change in Other liabilities was due primarily to an increase in Tax liability - long-term. The increase was due primarily to a long-term payable to HP Inc. for certain tax liabilities for which the Company is joint and severally liable under the Tax Matters Agreement entered into with HP Inc., effective November 1, 2015. |
Financing Receivables and Opera
Financing Receivables and Operating Leases | 12 Months Ended |
Oct. 31, 2016 | |
Leases [Abstract] | |
Financing Receivables and Operating Leases | Financing Receivables and Operating Leases Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of financing receivables were as follows: As of October 31, 2016 2015 In millions Minimum lease payments receivable $ 7,293 $ 6,941 Unguaranteed residual value 231 217 Unearned income (574 ) (503 ) Financing receivables, gross 6,950 6,655 Allowance for doubtful accounts (89 ) (95 ) Financing receivables, net 6,861 6,560 Less: current portion (1) (2,923 ) (2,918 ) Amounts due after one year, net (1) $ 3,938 $ 3,642 _______________________________________________________________________________ (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 Consolidated Balance Sheets. As of October 31, 2016, scheduled maturities of the Company's minimum lease payments receivable were as follows: 2017 2018 2019 2020 2021 Thereafter Total In millions Scheduled maturities of minimum lease payments receivable $ 3,187 $ 1,952 $ 1,263 $ 595 $ 234 $ 62 $ 7,293 Credit Quality Indicators Due to the homogenous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. The credit risk profile of gross financing receivables, based on internal risk ratings, was as follows: As of October 31, 2016 2015 In millions Risk Rating: Low $ 3,484 $ 3,467 Moderate 3,382 3,115 High 84 73 Total $ 6,950 $ 6,655 Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. Allowance for Doubtful Accounts The allowance for doubtful accounts for financing receivables is comprised of a general reserve and a specific reserve. The Company maintains general reserve percentages on a regional basis and bases such percentages on several factors, including consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, current economic conditions and information derived from competitive benchmarking. The Company excludes accounts evaluated as part of the specific reserve from the general reserve analysis. The Company establishes a specific reserve for financing receivables with identified exposures, such as customer defaults, bankruptcy or other events, that make it unlikely the Company will recover its investment. For individually evaluated receivables, the Company determines the expected cash flow for the receivable, which includes consideration of estimated proceeds from disposition of the collateral, and calculates an estimate of the potential loss and the probability of loss. For those accounts where a loss is considered probable, the Company records a specific reserve. The Company generally writes off a receivable or records a specific reserve when a receivable becomes 180 days past due, or sooner if the Company determines that the receivable is not collectible. The allowance for doubtful accounts related to financing receivables and changes therein were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 95 $ 111 $ 131 Provision for doubtful accounts 11 25 30 Deductions, net of recoveries (17 ) (41 ) (50 ) Balance at end of year $ 89 $ 95 $ 111 The gross financing receivables and related allowance evaluated for loss were as follows: As of October 31, 2016 2015 In millions Gross financing receivables collectively evaluated for loss $ 6,667 $ 6,399 Gross financing receivables individually evaluated for loss 283 256 Total $ 6,950 $ 6,655 Allowance for financing receivables collectively evaluated for loss $ 73 $ 82 Allowance for financing receivables individually evaluated for loss 16 13 Total $ 89 $ 95 Non-Accrual and Past-Due Financing Receivables The Company considers a financing receivable to be past due when the minimum payment is not received by the contractually specified due date. The Company generally places financing receivables on non-accrual status, which is suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due. Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible; however, if there is doubt regarding the ultimate collectability of the recorded financing receivable, all cash receipts are applied to the carrying amount of the financing receivable, which is the cost recovery method. In certain circumstances, such as when the Company deems a delinquency to be of an administrative nature, financing receivables may accrue interest after becoming 90 days past due. The non-accrual status of a financing receivable may not impact a customer's risk rating. After all of a customer's delinquent principal and interest balances are settled, the Company may return the related financing receivable to accrual status. The following table summarizes the aging and non-accrual status of gross financing receivables: As of October 31, 2016 2015 In millions Billed: (1) Current 1-30 days $ 337 $ 358 Past due 31-60 days 47 52 Past due 61-90 days 12 14 Past due >90 days 59 57 Unbilled sales-type and direct-financing lease receivables 6,495 6,174 Total gross financing receivables $ 6,950 $ 6,655 Gross financing receivables on non-accrual status (2) $ 163 $ 154 Gross financing receivables 90 days past due and still accruing interest (2) $ 120 $ 102 _______________________________________________________________________________ (1) Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables. (2) Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables. Operating Leases Operating lease assets included in machinery and equipment in the Consolidated Balance Sheets were as follows: As of October 31, 2016 2015 In millions Equipment leased to customers $ 5,467 $ 4,428 Accumulated depreciation (2,134 ) (1,513 ) $ 3,333 $ 2,915 As of October 31, 2016, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows: 2017 2018 2019 2020 2021 Thereafter Total In millions Minimum future rentals on non-cancelable operating leases $ 1,505 $ 971 $ 460 $ 98 $ 17 $ 2 $ 3,053 |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Oct. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Divestitures and Acquisitions in Fiscal 2016 Divestitures In fiscal 2016, the Company completed five divestitures, which resulted in $3.4 billion of net proceeds, of which $25 million represents a deposit that was received in the fourth quarter of fiscal 2015. These divestitures primarily represent the sale of the Company's controlling interest in H3C and MphasiS, which are discussed further below, and the sale of the TippingPoint business, which was previously reported within the Software segment. The gains associated with the sale of the Company's controlling interest in H3C and MphasiS are included in Gain on H3C and MphasiS divestitures in the Consolidated and Combined Statements of Earnings. The gains associated with all other divestitures were included in Selling, general and administrative expense in the Consolidated and Combined Statements of Earnings. In May 2016, the Company executed its joint partnership agreement with Tsinghua Holdings to bring together the Chinese enterprise technology assets of the Company and Tsinghua University to create a Chinese business provider of technology infrastructure. Under the definitive agreement, Tsinghua Holdings' subsidiary, Unisplendour Corporation, purchased 51% of the new business named H3C for $2.6 billion , which includes purchase consideration adjustments. H3C is comprised of the Company's former H3C Technologies and China-based server, storage and technology services businesses ("H3C disposal group"), which were previously reported within the EG segment until the time of the sale. As a result of the H3C divestiture, the Company recognized a gain of $2.2 billion . The Company's remaining China subsidiary maintains 100% ownership of its existing China-based Enterprise Services, Software and Helion Cloud businesses. The new H3C is the exclusive provider of the Company's server and storage portfolio, as well as the Company's exclusive hardware support services provider in China, customized for that market. The results of the H3C disposal group, which represented 100% of the Company's H3C Technologies and China-based server, storage and technology services businesses, were reflected in the Company's Consolidated and Combined Financial Statements through the date of closing. The pre-tax earnings for the fiscal years ended October 31, 2016, 2015 and 2014 were $182 million , $286 million and $406 million , respectively. Subsequently, the Company's remaining 49% ownership is accounted for under the equity method of accounting, and its proportionate share of H3C’s earnings are included in Loss from equity interests in the Consolidated and Combined Statements of Earnings. See Note 20, "Equity Method Investments" for additional information. In April 2016, the Company signed a definitive agreement with The Blackstone Group to sell the Company's equity stake in MphasiS Limited, an IT services provider headquartered in Bangalore, India, which was previously reported within the Services segment, for Indian Rupees ("INR") 430 per share. On September 1, 2016, the Company closed the MphasiS divestiture by selling its full equity stake, which was valued at $824 million at the purchase price of INR 430 per share. As a result of the MphasiS divestiture, the Company recognized a gain of $253 million . Acquisitions In fiscal 2016, the Company completed two acquisitions. In connection with these acquisitions, the Company recorded approximately $12 million of goodwill and $11 million of intangible assets. The purchase price allocation for acquisitions may reflect various preliminary fair value estimates and analysis, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocation that are subject to change relate to the fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and income based taxes, and residual goodwill. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. During the fiscal year ended October 31, 2016, $260 million of purchase price adjustments were recorded, primarily for provisional tax-related items recorded in conjunction with the acquisition of Aruba Networks, Inc. ("Aruba"), and as such impacted goodwill in the EG segment. In August 2016, the Company entered into a definitive agreement to acquire Silicon Graphics International Corp. ("SGI"), a global leader in high-performance solutions for compute, data analytics and data management, for $7.75 per share in cash, a transaction valued at approximately $275 million , net of cash and debt, as of the date of the agreement. SGI’s results of operations will be included within the EG segment. The transaction closed on November 1, 2016. Divestitures and Acquisitions in Prior Years Divestitures In fiscal 2015, the Company completed four divestitures, which resulted in $140 million of proceeds. These divestitures include the sale of its LiveVault and iManage businesses, which were previously reported within the Software segment. The gains associated with these divestitures were included in Selling, general and administrative expense in the Combined Statement of Earnings. Acquisitions In fiscal 2015, the Company completed five acquisitions. The purchase price allocation for these acquisitions is shown in the table below. Pro forma results of operations for these acquisitions are not presented, as these acquisitions were not material to the Company's consolidated and combined results of operations, either individually or in the aggregate. Goodwill is not deductible for tax purposes. The following table presents the aggregate purchase price allocation, including those items that were preliminary allocations, for the Company's acquisitions for the fiscal year ended October 31, 2015: In millions Goodwill $ 1,987 Amortizable intangible assets 704 In-process research and development 159 Net assets assumed 221 Total fair value of consideration $ 3,071 The Company's largest acquisition in fiscal 2015 was Aruba, which was completed in May 2015. The Company reports the financial results of Aruba's business in the Networking business unit within the EG segment. The acquisition date fair value of consideration of $2.8 billion consisted of cash paid for outstanding common stock, vested in-the-money stock awards and the estimated fair value of earned unvested stock awards assumed by the Company. In connection with this acquisition, the Company recorded approximately $1.8 billion of goodwill, $643 million of intangible assets and $153 million of in-process research and development. The Company is amortizing intangible assets on a straight-line basis over an estimated weighted-average life of six years . In fiscal 2014, the Company completed two acquisitions with a combined purchase price of $55 million , of which $12 million was recorded as goodwill and $25 million was recorded as intangible assets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Oct. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill and related changes in the carrying amount by reportable segment were as follows: Enterprise Enterprise (1) Software Financial Total In millions Balance at October 31, 2014 (2) $ 16,867 $ 97 $ 8,852 $ 144 $ 25,960 Goodwill acquired during the period 1,891 — 96 — 1,987 Goodwill divested during the period (3) — — (123 ) — (123 ) Changes due to foreign currency (52 ) (5 ) — — (57 ) Goodwill adjustments (4) 6 — (512 ) — (506 ) Balance at October 31, 2015 (2) 18,712 92 8,313 144 27,261 Goodwill acquired during the period 2 — 10 — 12 Goodwill divested during the period (5) (3,000 ) (90 ) (234 ) — (3,324 ) Changes due to foreign currency (29 ) (2 ) — — (31 ) Goodwill adjustments (6) 260 — — — 260 Balance at October 31, 2016 (2) $ 15,945 $ — $ 8,089 $ 144 $ 24,178 _______________________________________________________________________________ (1) Goodwill related to the MphasiS Limited reporting unit, which was sold in the fourth quarter of 2016. (2) Goodwill is net of accumulated impairment losses of $13.7 billion , which were recorded prior to October 31, 2014. Of that amount, $8.0 billion relates to the Enterprise Services segment and the remaining $5.7 billion relates to the Software segment. (3) Goodwill divested as part of the divestiture of the LiveVault and iManage businesses. (4) In connection with the Separation, former Parent retained the marketing optimization software product group, a continuing business which had historically been managed by the Company and included in the Software segment. The adjustment reflects the impact of removing the related goodwill of $512 million , allocated on a relative fair value basis, from former Parent. (5) Goodwill divested as part of the H3C transaction (EG), sale of TippingPoint (Software) and sale of MphasiS (ES). (6) Primarily measurement period adjustments to provisional tax items recorded in conjunction with the Aruba acquisition. Goodwill Impairments Goodwill is tested for impairment at the reporting unit level. As of October 31, 2016, the Company's reporting units were consistent with the reportable segments identified in Note 2, "Segment Information". Based on the results of the Company's annual impairment tests for fiscal 2016, 2015 and 2014, the Company determined that no impairment of goodwill existed. Intangible Assets Intangible assets are comprised of: As of October 31, 2016 As of October 31, 2015 Gross Accumulated Accumulated Net Gross Accumulated Accumulated Net In millions Customer contracts, customer lists and distribution agreements $ 1,394 $ (322 ) $ (856 ) $ 216 $ 5,109 $ (3,517 ) $ (856 ) $ 736 Developed and core technology and patents 4,190 (1,232 ) (2,138 ) 820 4,218 (1,110 ) (2,138 ) 970 Trade name and trade marks 178 (21 ) (109 ) 48 231 (57 ) (109 ) 65 In-process research and development — — — — 159 — — 159 Total intangible assets $ 5,762 $ (1,575 ) $ (3,103 ) $ 1,084 $ 9,717 $ (4,684 ) $ (3,103 ) $ 1,930 For fiscal 2016 , the decrease in gross intangible assets was due primarily to $3.5 billion of intangible assets which became fully amortized and have been eliminated from gross intangible assets and accumulated amortization, and $478 million of intangible assets that have been divested ( $379 million of accumulated amortization was associated with the divested assets). The decrease was partially offset by $11 million of purchases related to acquisitions. Intangible asset amortization expense for the fiscal year ended October 31, 2016 was $755 million . For fiscal 2015, the decrease in gross intangible assets was due primarily to $703 million of intangible assets that became fully amortized and have been eliminated from gross intangible assets and accumulated amortization, and the impact of removing intangible assets related to the marketing optimization software product group, which was retained by former Parent. The decrease was partially offset by intangible assets and in-process research and development resulting from the Company's acquisitions, primarily the acquisition of Aruba. Intangible asset amortization expense for the fiscal years ended October 31, 2015 and 2014 was $852 million and $906 million , respectively. In-process research and development consists of efforts that are in process on the date the Company acquires a business. Under the accounting guidance for intangible assets, in-process research and development acquired in a business combination is considered an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts. The Company begins amortizing its in-process research and development intangible assets upon completion of the projects. If an in-process research and development project is abandoned, the Company records an expense for the value of the related intangible asset to its Consolidated and Combined Statement of Earnings in the period of abandonment. The Company reclassified in-process research and development assets acquired of $159 million to developed and core technology and patents as the projects were completed, and began amortization during fiscal 2016 . As of October 31, 2016 , the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows: Finite-Lived Intangible Assets Weighted-Average In years Customer contracts, customer lists and distribution agreements 5 Developed and core technology and patents 5 Trade name and trade marks 7 As of October 31, 2016 , estimated future amortization expense related to finite-lived intangible assets was as follows: Fiscal year In millions 2017 $ 339 2018 248 2019 202 2020 172 2021 55 Thereafter 68 Total $ 1,084 |
Fair Value
Fair Value | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis: As of October 31, 2016 As of October 31, 2015 Fair Value Fair Value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets Cash Equivalents and Investments: Time deposits $ — $ 4,085 $ — $ 4,085 $ — $ 2,473 $ — $ 2,473 Money market funds 6,549 — — 6,549 4,592 — — 4,592 Mutual funds — — — — — 246 — 246 Equity securities in public companies 17 — — 17 46 7 — 53 Foreign bonds 8 279 — 287 8 305 — 313 Other debt securities — — 35 35 — — 40 40 Derivative Instruments: Interest rate contracts — 109 — 109 — — — — Foreign exchange contracts — 660 — 660 — 816 — 816 Other derivatives — — — — — 3 — 3 Total assets $ 6,574 $ 5,133 $ 35 $ 11,742 $ 4,646 $ 3,850 $ 40 $ 8,536 Liabilities Derivative Instruments: Interest rate contracts $ — $ 6 $ — $ 6 $ — $ 55 $ — $ 55 Foreign exchange contracts — 220 — 220 — 137 — 137 Other derivatives — 2 — 2 — — — — Total liabilities $ — $ 228 $ — $ 228 $ — $ 192 $ — $ 192 For the fiscal year ended October 31, 2016, there were no material transfers between levels within the fair value hierarchy. During the fiscal year ended October 31, 2015, the Company transferred $41 million of equity securities in public companies from Level 2 to Level 1 within the fair value hierarchy as a result of a change in the market activity of the underlying investment. The remaining transfers between levels within the fair value hierarchy were not material. During fiscal 2016, as a result of the MphasiS transaction, certain cash equivalents and investments and derivative instruments were divested. The financial instruments divested comprised of $74 million in time deposits, $332 million in mutual funds, $37 million in foreign bonds, and $9 million in foreign currency contracts previously included within Other current assets. Valuation Techniques Cash Equivalents and Investments: The Company holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. The Company values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: The Company uses forward contracts, interest rate and total return swaps to hedge certain foreign currency and interest rate exposures. The Company uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, the Company and counterparties' credit risk, foreign currency exchange rates, and forward and spot prices for currencies and interest rates. See Note 12, "Financial Instruments", for a further discussion of the Company's use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: The Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of the Company's debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. At October 31, 2016, the estimated fair value of the Company's short-term and long-term debt was $16.3 billion and the carrying value was $16.1 billion . As of October 31, 2015, the estimated fair value of the Company's short-term and long-term debt approximated its carrying value of $15.8 billion . If measured at fair value in the Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: The Company's non-marketable equity investments and non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy. In fiscal 2015, the Company determined that it would exit certain data centers. The Company conducted an analysis of the respective asset groups to determine if the carrying value was greater than the fair value. As a result of this assessment, the Company recorded a $136 million impairment charge to Impairment of data center assets on the Consolidated and Combined Statements of Earnings. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Oct. 31, 2016 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Financial Instruments Cash Equivalents and Available-for-Sale Investments Cash equivalents and available-for-sale investments were as follows: As of As of Cost Gross Gross Fair Cost Gross Gross Fair In millions Cash Equivalents: Time deposits $ 4,074 $ — $ — $ 4,074 $ 2,367 $ — $ — $ 2,367 Money market funds 6,549 — — 6,549 4,592 — — 4,592 Mutual funds — — — — 173 — — 173 Total cash equivalents 10,623 — — 10,623 7,132 — — 7,132 Available-for-Sale Investments: Debt securities: Time deposits 11 — — 11 106 — — 106 Foreign bonds 218 69 — 287 244 69 — 313 Other debt securities 47 — (12 ) 35 53 — (13 ) 40 Total debt securities 276 69 (12 ) 333 403 69 (13 ) 459 Equity securities: Mutual funds — — — — 73 — — 73 Equity securities in public companies 21 — (4 ) 17 55 7 (9 ) 53 Total equity securities 21 — (4 ) 17 128 7 (9 ) 126 Total available-for-sale investments 297 69 (16 ) 350 531 76 (22 ) 585 Total cash equivalents and available-for-sale investments $ 10,920 $ 69 $ (16 ) $ 10,973 $ 7,663 $ 76 $ (22 ) $ 7,717 In the fourth quarter of fiscal 2016, as a result of the MphasiS transaction, $33 million of time deposits and $214 million of mutual funds previously included in cash equivalents, and $41 million of time deposits, $37 million of foreign bonds and $118 million of mutual funds previously included in available-for-sale investments were divested. All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of October 31, 2016 and 2015 , the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Interest income related to cash, cash equivalents and debt securities was approximately $122 million in fiscal 2016 , $54 million in fiscal 2015 and $64 million in fiscal 2014 . Time deposits were primarily issued by institutions outside the U.S. as of October 31, 2016 and 2015 . The estimated fair value of the available-for-sale investments may not be representative of values that will be realized in the future. The gross unrealized loss as of October 31, 2016 and 2015 was due primarily to a decline in the fair value of a debt security of $12 million and $13 million , respectively, that has been in a continuous loss position for more than twelve months. The Company does not intend to sell this debt security, and it is not likely that the Company will be required to sell this debt security prior to the recovery of the amortized cost. Contractual maturities of investments in available-for-sale debt securities were as follows: As of Amortized Fair Value In millions Due in more than five years $ 276 $ 333 $ 276 $ 333 During fiscal 2016 , the Company recognized a $30 million impairment charge related to a public equity investment, as the Company determined that such impairment was other-than-temporary. The Company made its determination primarily based on closing prices during the quarter of impairment and the prospect of recovery in the near term. Equity securities in privately held companies that are accounted for as cost basis investments are included in Long-term financing receivables and other assets in the Consolidated Balance Sheets. These investments amounted to $128 million and $45 million at October 31, 2016 and 2015 , respectively. Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Consolidated Balance Sheet. These amounted to $2.6 billion at October 31, 2016 . For additional information, see Note 20, "Equity Method Investments". Derivative Instruments The Company is a global company exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, the Company uses derivative instruments, primarily forward contracts, interest rate swaps and total return swaps to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. The Company's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. The Company does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. The Company may designate its derivative contracts as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, the Company categorizes those economic hedges as other derivatives. Derivative instruments directly attributable to the Company are recognized at fair value in the Consolidated Balance Sheets. The change in fair value of the derivative instruments is recognized in the Consolidated and Combined Statements of Earnings or Consolidated and Combined Statements of Comprehensive Income depending upon the type of hedge as further discussed below. The Company classifies cash flows from its derivative programs with the activities that correspond to the underlying hedged items in the Consolidated and Combined Statements of Cash Flows. As a result of its use of derivative instruments, the Company is exposed to the risk that its counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, the Company has a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and the Company maintains dollar risk limits that correspond to each financial institution's credit rating and other factors. The Company's established policies and procedures for mitigating credit risk include reviewing and establishing limits for credit exposure and periodically reassessing the creditworthiness of its counterparties. Master netting agreements also mitigate credit exposure to counterparties by permitting the Company to net amounts due from the Company to a counterparty against amounts due to the Company from the same counterparty under certain conditions. To further mitigate credit exposure to counterparties, the Company has collateral security agreements, which allows the Company to hold collateral from, or require the Company to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of the Company and its counterparties. If the Company's credit rating falls below a specified credit rating, the counterparty has the right to request full collateralization of the derivatives' net liability position. Conversely, if the counterparty's credit rating falls below a specified credit rating, the Company has the right to request full collateralization of the derivatives' net liability position. Collateral is generally posted within two business days. The fair value of the Company's derivatives with credit contingent features in a net liability position was $9 million and $35 million at October 31, 2016 and 2015 , respectively, all of which were fully collateralized within two business days. Under the Company's derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting the Company that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect the Company's financial position or cash flows as of October 31, 2016 and 2015 . Fair Value Hedges The Company issues long-term debt in U.S. dollars based on market conditions at the time of financing. The Company may enter into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar LIBOR-based floating interest rate. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, the Company may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, the Company may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and may designate these swaps as fair value hedges. In fiscal 2015, concurrent with the issuance of fixed-rate Senior Notes, the Company entered into interest rate swaps to reduce the exposure of $9.5 billion of aggregate principal amount of fixed-rate Senior Notes to changes in fair value resulting from changes in interest rates by achieving LIBOR-based floating interest rate. See Note 13, "Borrowings", for more information related to the issuance of Senior Notes. For derivative instruments that are designated and qualify as fair value hedges, the Company recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated and Combined Statements of Earnings in the period of change. Cash Flow Hedges The Company uses forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. The Company's foreign currency cash flow hedges mature generally within twelve months ; however, forward contracts associated with sales-type and direct-financing leases and intercompany loans extend for the duration of the lease or loan term, which typically range from two to five years. For derivative instruments that are designated and qualify as cash flow hedges, the Company initially records changes in fair value for the effective portion of the derivative instrument in Accumulated other comprehensive loss as a separate component of equity in the Consolidated Balance Sheets and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. The Company reports the effective portion of its cash flow hedges in the same financial statement line item as changes in the fair value of the hedged item. Net Investment Hedges The Company uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. The Company records the effective portion of such derivative instruments together with changes in the fair value of the hedged items in Cumulative translation adjustment as a separate component of Equity in the Consolidated Balance Sheets. Other Derivatives Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. The Company also uses total return swaps and, to a lesser extent, interest rate swaps, based on equity or fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated and Combined Statements of Earnings in the period of change. Hedge Effectiveness For interest rate swaps designated as fair value hedges, the Company measures hedge effectiveness by offsetting the change in fair value of the hedged items with the change in fair value of the derivative. For forward contracts designated as cash flow or net investment hedges, the Company measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates. The Company recognizes any ineffective portion of the hedge in the Consolidated and Combined Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Consolidated and Combined Statements of Earnings in the period they arise. Fair Value of Derivative Instruments in the Consolidated Balance Sheets The gross notional and fair value of derivative instruments in the Consolidated Balance Sheets was as follows: As of As of Fair Value Fair Value Outstanding Other Long-Term Other Long-Term Outstanding Other Long-Term Other Long-Term In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 9,500 $ — $ 109 $ — $ 6 $ 9,500 $ — $ — $ — $ 55 Cash flow hedges: Foreign currency contracts 7,255 296 172 40 15 8,692 296 206 28 8 Net investment hedges: Foreign currency contracts 1,891 53 28 23 28 1,861 114 66 7 4 Total derivatives designated as hedging instruments 18,646 349 309 63 49 20,053 410 272 35 67 Derivatives not designated as hedging instruments Foreign currency contracts 16,496 100 11 103 11 9,283 46 88 50 40 Other derivatives 158 — — 2 — 127 3 — — — Total derivatives not designated as hedging instruments 16,654 100 11 105 11 9,410 49 88 50 40 Total derivatives $ 35,300 $ 449 $ 320 $ 168 $ 60 $ 29,463 $ 459 $ 360 $ 85 $ 107 Offsetting of Derivative Instruments The Company recognizes all derivative instruments on a gross basis in the Consolidated Balance Sheets. The Company's derivative instruments are subject to master netting arrangements and collateral security arrangements. The Company does not offset the fair value of its derivative instruments against the fair value of cash collateral posted under collateral security agreements. As of October 31, 2016 and 2015 , information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements was as follows: As of In the Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Gross Gross Net Amount Derivatives Financial Net Amount In millions Derivative assets $ 769 $ 769 $ 214 $ 465 (1) $ 90 Derivative liabilities $ 228 $ 228 $ 214 $ 10 (2) $ 4 As of In the Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Gross Gross Net Amount Derivatives Financial Net Amount In millions Derivative assets $ 819 $ — $ 819 $ 153 $ 631 (1) $ 35 Derivative liabilities $ 192 $ — $ 192 $ 153 $ 19 (2) $ 20 _______________________________________________________________________________ (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 through re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. Effect of Derivative Instruments on the Consolidated and Combined Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Recognized in Income on Derivative and Related Hedged Item Derivative Instrument Location 2016 2015 2014 Hedged Item Location 2016 2015 2014 In millions In millions Interest rate contracts Interest and other, net $ 158 $ (55 ) $ — Fixed-rate debt Interest and other, net $ (158 ) $ 55 $ — The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Gains (Losses) Reclassified from Accumulated OCI 2016 2015 2014 Location 2016 2015 2014 In millions In millions Cash flow hedges: Foreign currency contracts $ (16 ) $ 279 $ 149 Net revenue $ 19 $ 276 $ (4 ) Foreign currency contracts 6 (3 ) 13 Cost of products — 6 3 Foreign currency contracts — (2 ) 9 Other operating expenses — (4 ) (9 ) Foreign currency contracts — — — Gain on MphasiS divestiture 8 — — Foreign currency contracts 236 207 (60 ) Interest and other, net 243 202 (50 ) Total currency hedges $ 226 $ 481 $ 111 $ 270 $ 480 $ (60 ) Net investment hedges: Foreign currency contracts $ (58 ) $ 228 $ 57 Interest and other, net $ — $ — $ — As of October 31, 2016 , 2015 and 2014 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 fiscal 2016 , 2015 and 2014 . As of October 31, 2016 , the Company expects to reclassify an estimated net Accumulated other comprehensive gain of approximately $40 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. The pre-tax effect of derivative instruments not designated as hedging instruments on the Consolidated and Combined Statements of Earnings for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Recognized in Income on Derivatives Location 2016 2015 2014 In millions Foreign currency contracts Interest and other, net $ (425 ) $ 11 $ 169 Other derivatives Interest and other, net (5 ) 1 — Total $ (430 ) $ 12 $ 169 |
Borrowings
Borrowings | 12 Months Ended |
Oct. 31, 2016 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings 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 October 31, 2016 2015 Amount Weighted-Average Amount Weighted-Average Dollars in millions Current portion of long-term debt $ 2,776 1.7 % $ 161 2.6 % FS Commercial paper 326 0.1 % 39 0.2 % Notes payable to banks, lines of credit and other (1) 430 2.0 % 491 2.7 % Total notes payable and short-term borrowings $ 3,532 $ 691 _______________________________________________________________________________ (1) Notes payable to banks, lines of credit and other includes $381 million and $374 million at October 31, 2016 and 2015 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries. Long-Term Debt As of October 31, 2016 2015 In millions Hewlett Packard Enterprise Senior Notes (1) $2,250 issued at discount to par at a price of 99.944% in October 2015 at 2.45%, due October 5, 2017, interest payable semi-annually on April 5 and October 5 of each year $ 2,249 $ 2,249 $2,650 issued at discount to par at a price of 99.872% in October 2015 at 2.85%, due October 5, 2018, interest payable semi-annually on April 5 and October 5 of each year 2,648 2,647 $3,000 issued at discount to par at a price of 99.972% in October 2015 at 3.6%, due October 15, 2020, interest payable semi-annually on April 15 and October 15 of each year 2,999 2,999 $1,350 issued at discount to par at a price of 99.802% in October 2015 at 4.4%, due October 15, 2022, interest payable semi-annually on April 15 and October 15 of each year 1,348 1,347 $2,500 issued at discount to par at a price of 99.725% in October 2015 at 4.9%, due October 15, 2025, interest payable semi-annually on April 15 and October 15 of each year 2,494 2,493 $750 issued at discount to par at a price of 99.942% in October 2015 at 6.2%, due October 15, 2035, interest payable semi-annually on April 15 and October 15 of each year 750 749 $1,500 issued at discount to par at a price of 99.932% in October 2015 at 6.35%, due October 15, 2045, interest payable semi-annually on April 15 and October 15 of each year 1,499 1,499 $350 issued at par in October 2015 at three-month USD LIBOR plus 1.74%, due October 5, 2017, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year 350 350 $250 issued at par in October 2015 at three-month USD LIBOR plus 1.93%, due October 5, 2018, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year 250 250 EDS Senior Notes (1) $300 issued October 1999 at 7.45%, due October 2029 312 313 Other, including capital lease obligations, at 0.00%-7.45%, due in calendar years 2016-2022 (2) 382 423 Fair value adjustment related to hedged debt 103 (55 ) Less: current portion (2,776 ) (161 ) Total long-term debt $ 12,608 $ 15,103 _______________________________________________________________________________ (1) The Company may redeem some or all of the fixed-rate Hewlett Packard Enterprise Senior Notes and the EDS Senior Notes at any time in accordance with the terms thereof. (2) Other, including capital lease obligations includes $181 million and $196 million as of October 31, 2016 and 2015 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related capital and operating leases. For both the periods presented, the carrying amount of the assets approximated the carrying amount of the borrowings. In fiscal 2016, as a result of the MphasiS transaction, $40 million of long-term debt previously included in the Other, including capital lease obligations category was divested. Interest expense on borrowings recognized in the Consolidated and Combined Statements of Earnings was as follows: Fiscal years ended October 31, Expense Location 2016 2015 2014 In millions Financing interest Financing interest $ 249 $ 240 $ 277 Interest expense Interest and other, net 328 29 45 Total interest expense $ 577 $ 269 $ 322 Hewlett Packard Enterprise Senior Notes On October 9, 2015, Hewlett Packard Enterprise completed its offering of $14.0 billion of fixed rate notes and $0.6 billion of floating rate notes, with the interest rate and maturity date described in the table above. The Notes are Hewlett Packard Enterprise's senior unsecured obligations and rank equally in right of payment with all of Hewlett Packard Enterprise's existing and future senior unsecured indebtedness. The Notes were initially guaranteed on a senior unsecured basis by HP Co., which guarantee was automatically and unconditionally released upon HP Co.'s distribution of all of the outstanding shares of Hewlett Packard Enterprise common stock to HP Co.'s shareholders on November 1, 2015, in connection with the separation of Hewlett Packard Enterprise from HP Co. (the "Distribution"), and beneficial ownership of substantially all of the assets intended to be included in Hewlett Packard Enterprise were transferred to Hewlett Packard Enterprise. Hewlett Packard Enterprise distributed approximately $14.5 billion of net proceeds from the Notes offering to HP Co. HP Co. utilized the net proceeds to fund repurchases and redemptions of its outstanding Senior Notes, and to repay other indebtedness, to facilitate the separation of Hewlett Packard Enterprise from HP Co. During fiscal 2015, the Company incurred issuance costs of $54 million which are included in Other assets in the Consolidated Balance Sheets and are being amortized to interest expense over the term of the Notes. As of October 31, 2016, issuance costs included in Other assets in the Consolidated Balance Sheets amounted to $50 million . On November 23, 2016, Hewlett Packard Enterprise launched an offer to exchange new registered notes for all of the outstanding $14.6 billion of unregistered Senior Notes. The terms of the new Notes in the exchange offer are substantially identical to the terms of the outstanding unregistered Senior Notes, except that the new Notes will be registered under the Securities Act, and certain transfer restrictions, registration rights and additional interest provisions relating to the outstanding Senior Notes do not apply to the new Notes. As disclosed in Note 12, "Financial Instruments", the Company uses interest rate swaps to mitigate the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar LIBOR-based floating interest rate. Concurrent with the issuance of the Senior Notes, Hewlett Packard Enterprise entered into interest rate swaps to reduce the exposure of $9.5 billion of aggregate principal amount of fixed rate Senior Notes to changes in fair value resulting from changes in interest rates by achieving LIBOR-based floating interest rate. Interest rates on long-term debt in the table above have not been adjusted to reflect the impact of any interest rate swaps. Available Borrowing Resources The Company had the following resources available to obtain short- or long-term financing if additional liquidity is needed: As of In millions Commercial paper programs $ 4,174 Uncommitted lines of credit $ 1,884 Commercial Paper 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 $500 million in aggregate principal amount of commercial paper. Hewlett Packard Enterprise maintains two commercial paper 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 $4.0 billion . 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 programs at any one time cannot exceed the $4.0 billion authorized by Hewlett Packard Enterprise's Board of Directors. 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 $500 million . Revolving Credit Facility On November 1, 2015, 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 with aggregate lending commitments of $4.0 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. Future Maturities of Long-term Debt As of October 31, 2016 , aggregate future maturities of the Company's long-term debt at face value (excluding a fair value adjustment related to hedged debt of $103 million and a net discount on debt issuance of $1 million ), including capital lease obligations were as follows: Fiscal year In millions 2017 $ 2,777 2018 2,948 2019 40 2020 3,002 2021 57 Thereafter 6,458 Total $ 15,282 |
Related Party Transactions and
Related Party Transactions and Former Parent Company Investment | 12 Months Ended |
Oct. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Former Parent Company Investment | Related Party Transactions and Former Parent Company Investment Prior to November 1, 2015, the Company consisted of the enterprise technology infrastructure, software, services, and financing businesses of former Parent and thus, transactions with former Parent were considered related party transactions. Following November 1, 2015, in connection with the Separation, the Company became an independent publicly-traded company. As a result, transactions with HP Inc. are no longer considered related party transactions. On October 31, 2015 and November 1, 2015, in connection with the Separation, the Company entered into several agreements with former Parent that govern the relationship between the Company and former Parent following the distribution, including the following: • Separation and Distribution Agreement; • Transition Services Agreement; • Tax Matters Agreement; • Employee Matters Agreement; • Real Estate Matters Agreement; • Master Commercial Agreement; and • Information Technology Service Agreement. These agreements provided the allocation between the Company and former Parent's assets, employees, liabilities, and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Separation. Obligations under the service and commercial contracts generally extend through five years. Final Cash Allocation from former Parent In December 2015, and in connection with the Separation and Distribution Agreement, the Company received a net cash allocation of $526 million from former Parent. The cash allocation was based on the projected cash requirements of the Company, in light of the intended investment grade credit rating, business plan and anticipated operations and activities. Receivable from and Payable (to) former Parent As of In millions Receivable from former Parent (1) $ 492 Payable to former Parent (2) (343 ) Net receivable from former Parent $ 149 ______________________________________________________________________________ (1) The Company includes the receivable from former Parent in Other current assets in the accompanying Consolidated Balance Sheets. (2) The Company includes the employee compensation and benefits portion in Employee compensation and benefits, and all other accruals from former Parent in Other accrued liabilities in the accompanying Consolidated Balance Sheets. Purchases from former Parent During fiscal 2015 and 2014 , the Company purchased equipment from other businesses of former Parent in the amount of $1.3 billion and $1.2 billion , respectively. Allocation of Corporate Expenses Prior to the Separation, the Consolidated and Combined Statements of Earnings and Comprehensive Income include an allocation of general corporate expenses from former Parent for certain management and support functions which are provided on a centralized basis within former Parent. These management and support functions include, but are not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement, and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount, or other relevant measures. These allocations were $3.6 billion and $4.2 billion in fiscal 2015 and 2014 , respectively. Management of the Company and former Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. These allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Former Parent Company Investment Former Parent company investment in the Consolidated Balance Sheets represents former Parent's historical investment in the Company, the net effect of transactions with and allocations from former Parent and the Company's accumulated earnings. In connection with the Separation, the Company entered into a Tax Matters Agreement with former Parent, which resulted in the indemnification of certain pre-Separation tax liabilities. During the fiscal year ended October 31, 2016, Separation-related adjustments totaling $1.2 billion were recorded in stockholders' equity. Separation-related adjustments to equity primarily reflected the impact of the income tax indemnification and the transfer of certain deferred tax assets and liabilities between former Parent and the Company. See Note 18, "Guarantees, Indemnifications and Warranties", for a full description of the Tax Matters Agreement. As of November 1, 2015, in connection with the Separation and distribution, former Parent's investment in the Company's business was re-designated as stockholders' equity and allocated between common stock and additional paid-in capital based on the number of shares of the Company's common stock outstanding at the distribution date. Net Transfers from former Parent Net transfers from former Parent are included within former Parent company investment in the Consolidated Balance Sheets. Former Parent historically used a centralized approach to cash management and the financing of its operations. Prior to the Separation, transactions between the Company and former Parent were considered to be effectively settled for cash at the time the transaction was recorded. The net effect of these transactions is included in Net transfer from former Parent in Consolidated and Combined Statements of Cash Flows. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Oct. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders' Equity Taxes related to Other Comprehensive Loss Fiscal years ended October 31, 2016 2015 2014 In millions Taxes on change in net unrealized (losses) gains on available-for-sale securities: Tax benefit (provision) on net unrealized (losses) gains arising during the period $ 2 $ 2 $ (1 ) Tax benefit on losses reclassified into earnings (2 ) — — — 2 (1 ) Taxes on change in net unrealized (losses) gains on cash flow hedges: Tax provision on net unrealized gains arising during the period (14 ) (69 ) (32 ) Tax provision on net (gains) losses reclassified into earnings 25 76 1 11 7 (31 ) Taxes on change in unrealized components of defined benefit plans: Tax benefit on losses arising during the period 63 30 58 Tax benefit on amortization of actuarial loss and prior service benefit (20 ) (10 ) (6 ) Tax provision on curtailments, settlements and other (1 ) — (3 ) Tax benefit on Plans transferred from former Parent during the period — 255 — 42 275 49 Taxes on change in cumulative translation adjustment: Tax on cumulative translation adjustment arising during the period 20 (73 ) (27 ) Tax on release of cumulative translation adjustment as a result of H3C and MphasiS divestitures (22 ) — — (2 ) (73 ) (27 ) Tax benefit (provision) on other comprehensive loss $ 51 $ 211 $ (10 ) Changes and reclassifications related to Other Comprehensive Loss, net of taxes Fiscal years ended October 31, 2016 2015 2014 In millions Other comprehensive loss, net of taxes: Change in net unrealized (losses) gains on available-for-sale securities: Net unrealized (losses) gains arising during the period $ (2 ) $ (8 ) $ 4 Losses (gains) reclassified into earnings 1 — (1 ) (1 ) (8 ) 3 Change in net unrealized (losses) gains on cash flow hedges: Net unrealized gains arising during the period 212 412 79 Net (gains) losses reclassified into earnings (1) (245 ) (404 ) 61 (33 ) 8 140 Change in unrealized components of defined benefit plans: Losses arising during the period (1,714 ) (352 ) (736 ) Amortization of actuarial loss and prior service benefit (2) 264 204 76 Curtailments, settlements and other (19 ) 4 15 Plans transferred from former Parent during the period — (2,352 ) — Merged into former Parent's Shared plan during the period — — 61 (1,469 ) (2,496 ) (584 ) Change in cumulative translation adjustment: Cumulative translation adjustment arising during the period (134 ) (271 ) (112 ) Release of cumulative translation adjustment as a result of H3C and MphasiS divestitures 53 — — (81 ) (271 ) (112 ) Other comprehensive loss, net of taxes $ (1,584 ) $ (2,767 ) $ (553 ) _______________________________________________________________________________ (1) Reclassification of pre-tax (gains) losses on cash flow hedges into the Consolidated and Combined Statements of Earnings was as follows: 2016 2015 2014 In millions Net revenue $ (19 ) $ (276 ) $ 4 Cost of products — (6 ) (3 ) Other operating expenses — 4 9 Gain on MphasiS divestiture (8 ) — — Interest and other, net (243 ) (202 ) 50 $ (270 ) $ (480 ) $ 60 (2) These components are included in the computation of net pension and post-retirement benefit (credit) cost in Note 4, "Retirement and Post-Retirement Benefit Plans". The components of accumulated other comprehensive loss, net of taxes as of October 31, 2016 and changes during fiscal 2016 were as follows: Net unrealized Net unrealized Unrealized Cumulative Accumulated In millions Balance at beginning of period $ 55 $ 68 $ (4,173 ) $ (965 ) $ (5,015 ) Other comprehensive (loss) income before reclassifications (2 ) 212 (1,733 ) (134 ) (1,657 ) Reclassifications of (gains) losses into earnings 1 (245 ) 264 53 73 Balance at end of period $ 54 $ 35 $ (5,642 ) $ (1,046 ) $ (6,599 ) Dividends On November 11, 2015 , the Board of Directors of the Company authorized a regular quarterly cash dividend for its common stock. The stockholders of HPE common stock are entitled to receive dividends when and as declared by HPE's Board of Directors. Dividends declared were $0.22 per common share in fiscal 2016. Share Repurchase Program On October 13, 2015, the Board of Directors of the Company announced the authorization of a $3.0 billion share repurchase program. On May 24, 2016, the Board of Directors announced the authorization of an additional $3.0 billion under the share repurchase program. The Company's share repurchase program authorizes both open market and private repurchase transactions and does not have a specific expiration date. The Company may choose to repurchase shares when sufficient liquidity exists and the shares are trading at a discount relative to estimated intrinsic value. The Company entered into two separate accelerated share repurchase agreements ("ASR Agreements") with financial institutions in November 2015 and May 2016. Under the ASR agreements, the Company paid upfront amounts of $1,075 million and $1,450 million , respectively. For fiscal 2016, the Company retired a total of 158 million shares as a result of its share repurchase program, which included purchases of 148 million shares under the ASR Agreements with the remainder under open market repurchases. The 158 million shares were retired and recorded as a $2.7 billion reduction to stockholder's equity. The 148 million shares repurchased under the ASR agreements were repurchased based on the daily volume weighted-average stock price of the Company's common stock during the term of the transaction, plus transaction fees. As of October 31, 2016, the Company had remaining authorization of $3.3 billion for future share repurchases. |
Net Earnings Per Share
Net Earnings Per Share | 12 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Net Earnings Per Share | 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 awards, stock options, and performance-based awards. For periods prior to fiscal 2015, the Company calculated basic net EPS using the net earnings and number of Hewlett-Packard Company shares outstanding as of October 31, 2015. On November 1, 2015, the distribution date, Hewlett-Packard Company shareholders received one share of HPE common stock for every share of Hewlett-Packard Company common stock held as of the record date, October 21, 2015. The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows: Fiscal years ended October 31, 2016 2015 2014 In millions, except per share amounts Numerator: Net earnings $ 3,161 $ 2,461 $ 1,648 Denominator: (1)(2) Weighted-average shares used to compute basic net EPS 1,715 1,804 1,804 Dilutive effect of employee stock plans (3) 24 30 30 Weighted-average shares used to compute diluted net EPS 1,739 1,834 1,834 Net earnings per share: Basic $ 1.84 $ 1.36 $ 0.91 Diluted $ 1.82 $ 1.34 $ 0.90 Anti-dilutive weighted-average stock awards (4) 32 28 28 _______________________________________________________________________________ (1) The Company considers restricted stock awards that provide the holder with a non-forfeitable right to receive dividends to be participating securities. As of October 31, 2016 and 2015, there were no shares outstanding of restricted stock that provided the holder with a non-forfeitable right to receive dividends. For fiscal 2014, net earnings allocated to participating securities were not significant. (2) On November 1, 2015, the Separation and distribution date, HP Inc. stockholders received one share of Hewlett Packard Enterprise common stock for every share of HP Inc. common stock held as of the record date, October 21, 2015. For comparative purposes, the same number of shares used to compute basic and diluted net earnings per share for the fiscal year ended October 31, 2015 is used in the calculation of basic and diluted net earnings per share for fiscal 2015 and 2014. (3) For fiscal 2015 and 2014, the Company calculated the weighted-average dilutive effect of employee stock plans after conversion by multiplying the dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015. (4) The Company excludes stock awards where the assumed proceeds exceed the average market price from the calculation of diluted net EPS, because their effect would be anti-dilutive. The assumed proceeds of a stock award include the sum of its exercise price (if the award is an option), average unrecognized compensation cost and excess tax benefit. For the fiscal years ended October 31, 2015 and 2014, the Company's anti-dilutive shares were calculated by multiplying the anti-dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015. |
Litigation and Contingencies
Litigation and Contingencies | 12 Months Ended |
Oct. 31, 2016 | |
Loss Contingency [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of 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 October 31, 2016 , it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements. Litigation, Proceedings and Investigations Fair Labor Standards Act Litigation . Hewlett Packard Enterprise is involved in several pre-Separation lawsuits in which the plaintiffs are seeking unpaid overtime compensation and other damages based on allegations that various employees of Electronic Data Systems Corporation ("EDS") or HP Inc. have been misclassified as exempt employees under the Fair Labor Standards Act (the "FLSA") and/or in violation of the California Labor Code or other state laws. Those matters include the following: • Karlbom, et al. v. Electronic Data Systems Corporation was a class action filed on March 16, 2009 in California Superior Court alleging that certain information technology employees allegedly involved in installing and/or maintaining computer software and hardware were misclassified as exempt employees. On October 30, 2015, plaintiffs filed a motion to certify a Rule 23 state class of all California-based EDS employees in the Infrastructure Associate, Infrastructure Analyst, Infrastructure Specialist, and Infrastructure Specialist Senior job codes from March 16, 2005 through October 31, 2009 who they claim were improperly classified as exempt from overtime under state law. On January 22, 2016, the court denied plaintiffs' motion for class certification. On April 8, 2016, plaintiffs filed a notice of appeal to the California Court of Appeal, which was later dismissed voluntarily. On October 3, 2016, the court dismissed this matter with prejudice pursuant to an agreed-upon settlement. • Benedict v. Hewlett-Packard Company was a purported class and collective action filed on January 10, 2013 in the United States District Court for the Northern District of California alleging that certain technical support employees allegedly involved in installing, maintaining and/or supporting computer software and/or hardware for HP Inc. were misclassified as exempt employees under the FLSA. The plaintiffs also alleged that HP Inc. violated California law by, among other things, allegedly improperly classifying these employees as exempt. On February 13, 2014, the court granted plaintiff's motion for conditional class certification. On May 7, 2015, plaintiff filed a motion to certify a Rule 23 state class of certain Technical Solutions Consultants in California, Massachusetts, and Colorado who they claim were improperly classified as exempt from overtime under state law. On July 30, 2015, the court dismissed the Technology Consultant and certain Field Technical Support Consultant opt-ins from the conditionally certified FLSA collective action. The court denied plaintiffs' motion for Rule 23 class certification on March 29, 2016. On April 12, 2016, plaintiffs filed a notice of appeal of that decision to the United States Court of Appeal for the Ninth Circuit, which was denied. On July 13, 2016, the court granted HP’s motion to decertify the FLSA class that had been conditionally certified on February 13, 2014. Currently, only the claims of the three individual named plaintiffs remain in the district court. India Directorate of Revenue Intelligence Proceedings . On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued show cause notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., seven HP India employees and one former HP India employee alleging that HP India underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million , plus penalties. Prior to the issuance of the show cause notices, HP India deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement to not seize HP India products and spare parts and to not interrupt the transaction of business by HP India. On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products-related show cause notice affirming certain duties and penalties against HP India and the named individuals of approximately $386 million , of which HP India had already deposited $9 million . On December 11, 2012, HP India voluntarily deposited an additional $10 million in connection with the products-related show cause notice. On April 20, 2012, the Commissioner issued an order on the parts-related show cause notice affirming certain duties and penalties against HP India and certain of the named individuals of approximately $17 million , of which HP India had already deposited $7 million . After the order, HP India deposited an additional $3 million in connection with the parts-related show cause notice 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. No new hearing date has been set. Department of Justice, Securities and Exchange Commission Proceedings . In April 2014, HP Inc. and HP Inc. subsidiaries in Russia, Poland, and Mexico collectively entered into agreements with the U.S. Department of Justice ("DOJ") and the Securities and Exchange Commission ("SEC") to resolve claims of Foreign Corrupt Practices Act ("FCPA") violations. Pursuant to the terms of the resolutions with the DOJ and SEC, HP Inc. was required to undertake certain compliance, reporting and cooperation obligations for a three year period. In October of 2015, Hewlett Packard Enterprise contractually undertook the same compliance, reporting and cooperation obligations that were held by HP Inc. under the DOJ resolutions for the balance of the three year period. Hewlett Packard Enterprise has reached a similar agreement with the SEC, which is set forth in an amended SEC administrative order dated July 15, 2016. 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 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 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 2017 and any subsequent appeal on the merits to last several years. Cisco Systems . On August 21, 2015, Cisco Systems, Inc. ("Cisco") and Cisco Systems Capital Corporation ("Cisco Capital") filed an action in Santa Clara County Superior Court for declaratory judgment and breach of contract against HP Inc. in connection with a dispute arising out of a third-party's termination of a services contract with HP Inc. As part of that third-party services contract, HP Inc. separately contracted with Cisco on an agreement to utilize Cisco products and services. HP Inc. prepaid the entire amount due Cisco through a financing arrangement with Cisco Capital. Following the termination of HP Inc.'s services contract with the third-party, HP Inc. no longer required Cisco's products and services, and accordingly, exercised its contractual termination rights under the agreement with Cisco, and requested that Cisco apply the appropriate credit toward the remaining balance owed Cisco Capital. This lawsuit relates to the calculation of that credit under the agreement between Cisco and HP Inc. Cisco contends that after the credit is applied, HP Inc. still owes Cisco Capital approximately $58 million . HP Inc. contends that under a proper reading of the agreement, HP Inc. owes nothing to Cisco Capital, and that Cisco owes a significant amounts to HP Inc. On December 18, 2015, the court held a status conference at which it lifted the responsive pleading and discovery stay. Following the conference, Cisco filed an amended complaint that abandons the claim for breach of contract set forth in the original complaint, and asserts a single cause of action for declaratory relief concerning the proper calculation of the cancellation credit. On January 19, 2016, HP Inc. filed a counterclaim for breach of contract simultaneously with its answer to the amended complaint. Fact discovery is scheduled to conclude December 16, 2016. Expert discovery is scheduled to be completed by March 31, 2017. The court has not set a trial date. Washington DC Navy Yard Litigation : In December 2013, HP Enterprise Services, LLC ("HPES") was named in the first lawsuit arising out of the September 2013 Washington DC Navy Yard shooting that resulted in the deaths of twelve individuals. The perpetrator was an employee of The Experts, HPES's now-terminated subcontractor on its IT services contract with the U.S. Navy. This initial action was filed in the Middle District of Florida but was transferred in February 2015 to the United States District Court for the District of Columbia so that it and all other known cases arising out of the shooting could be heard before the same Judge. HPES has been named as a defendant in fifteen lawsuits arising out of the shooting, including six lawsuits that were filed immediately prior to the expiration of the statute of limitations on September 16, 2016. All cases assert various negligence claims against HPES, The Experts, and other parties, including the U.S. Navy. The court previously dismissed the plaintiffs' claims against the U.S. Navy but did not, at that time, decide the motions to dismiss of HPES or The Experts. On September 15, 2016, the court issued an opinion granting in part and denying in part HPES' motion to dismiss the nine cases filed prior to September 2016. HPES also moved to dismiss the six most recently filed complaints on November 21, 2016. Forsyth, et al. vs. HP Inc. and Hewlett Packard Enterprise : This purported class and collective action was filed on August 18, 2016 in the United States District Court for the Northern District of California, against HP Inc. and Hewlett Packard 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 U.S. residents employed by defendants who had their employment terminated pursuant to a WFR plan on or after May 23, 2012, and who were 40 years of age or older at the time of termination. Plaintiffs also seek to represent a Rule 23 class under California law comprised of all persons 40 years of age or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after May 23, 2012. Hewlett-Packard Company v. Oracle (Itanium) : On June 15, 2011, HP Inc. filed suit against Oracle in Santa Clara Superior Court 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 was bifurcated into two 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 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 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. Final judgment was entered on October 20, 2016. Oracle has publicly stated that it will appeal. The Company expects that any appeal could take several years to be resolved and could materially affect the amount ultimately recovered by the Company. The amounts ultimately awarded, if any, would be recorded in the period received. Pursuant to the terms of the Separation and Distribution 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. Environmental The Company's operations and products are or may in the future become subject to various federal, state, local and foreign laws and regulations concerning environmental protection, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the clean-up of contaminated sites, the substances and materials used in the Company's products, the energy consumption of products, services and operations and the operational or financial responsibility for recycling, treatment and disposal of those products. This includes legislation that makes producers of electrical goods, including servers and networking equipment, financially responsible for specified collection, recycling, treatment and disposal of past and future covered products (sometimes referred to as "product take-back legislation"). The Company could incur substantial costs, its products could be restricted from entering certain jurisdictions, and it could face other sanctions, if it were to violate or become liable under environmental laws or if its products become non-compliant with environmental laws. The Company's potential exposure includes impacts on revenue, fines and civil or criminal sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and timing of costs to comply with environmental laws are difficult to predict. In 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 contaminated sites, and 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 certain environmental liabilities, both ongoing and arising in the future, pursuant to its Separation and Distribution Agreement with HP Inc. |
Guarantees, Indemnifications an
Guarantees, Indemnifications and Warranties | 12 Months Ended |
Oct. 31, 2016 | |
Guarantees [Abstract] | |
Guarantees, Indemnifications and Warranties | Guarantees, Indemnifications and Warranties Guarantees In the ordinary course of business, the Company may issue performance guarantees to certain of its clients, customers and other parties pursuant to which the Company has guaranteed the performance obligations of third parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In general, the Company would be obligated to perform over the term of the guarantee in the event a specified triggering event occurs as defined by the guarantee. The Company believes the likelihood of having to perform under a material guarantee is remote. The Company has entered into service contracts with certain of its clients that are supported by financing arrangements. If a service contract is terminated as a result of the Company's non-performance under the contract or failure to comply with the terms of the financing arrangement, the Company could, under certain circumstances, be required to acquire certain assets related to the service contract. The Company believes the likelihood of having to acquire a material amount of assets under these arrangements is remote. Indemnifications In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify a third party to such arrangement from any losses incurred relating to the services they perform on behalf of the Company or for losses arising from certain events as defined within the particular contract, which may include, for example, litigation or claims relating to past performance. The Company also provides indemnifications to certain vendors and customers against claims of IP infringement made by third parties arising from the use by such vendors and customers of the Company's software products and services and certain other matters. Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial. General Cross-indemnification In connection with the Separation, the Company entered into a Separation and Distribution Agreement with HP Inc. effective November 1, 2015 where the Company agreed to indemnify HP Inc., each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to the Company as part of the Separation. HP Inc. similarly agreed to indemnify the Company, each of its subsidiaries and each of their respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to HP Inc. as part of the Separation. As a result, as of October 31, 2016 and October 31, 2015 the Company recorded both a receivable from HP Inc. of $56 million and $232 million and a payable to HP Inc. of $41 million and $38 million related to litigation matters and other contingencies, respectively. Shared Litigation with HP Inc. As part of the Separation and Distribution Agreement, the Company and HP Inc. agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to general corporate matters of HP Inc. arising prior to the Separation. Tax Matters Agreement and Other Income Tax Matters In connection with the Separation, the Company entered into a Tax Matters Agreement (the "Tax Matters Agreement") with HP Inc. effective November 1, 2015 that governs the rights and obligations of the Company and HP Inc. for certain pre-Separation tax liabilities. The Tax Matters Agreement provides that the Company and HP Inc. will share certain pre-Separation income tax liabilities that arise from adjustments made by tax authorities to the Company and HP Inc.'s U.S. and certain non-U.S. income tax returns. In certain jurisdictions, the Company and HP Inc. have joint and several liability for past income tax liabilities and accordingly, the Company could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. In these cases, the Company records the entire liability, which is partially offset by the indemnification receivable from HP Inc., thereby reflecting the Company's net exposure in its Consolidated Balance Sheets. In addition, if the Distribution of Hewlett Packard Enterprise's common shares to the HP Inc. shareholders are determined to be taxable, the Company and HP Inc. would share the tax liability equally, unless the taxability of the Distribution is the direct result of action taken by either the Company or HP Inc. subsequent to the Distribution in which case the party causing the Distribution to be taxable would be responsible for any taxes imposed on the Distribution. As of October 31, 2016, the Company recorded a net long-term receivable of $1.3 billion from HP Inc. for certain tax liabilities that the Company is joint and severally liable for, but for which it is indemnified by HP Inc. under the Tax Matters Agreement. The actual amount that the Company may receive could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years. Warranties The Company accrues the estimated cost of product warranties at the time it recognizes revenue. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of the Company's baseline experience, affect the estimated warranty obligation. The Company's aggregate product warranty liabilities and changes therein were as follows: Fiscal years ended 2016 2015 In millions Balance at beginning of year $ 523 $ 571 Accruals for warranties issued 376 373 Adjustments related to pre-existing warranties (including changes in estimates) 1 (16 ) Divested as part of the H3C transaction (23 ) — Settlements made (in cash or in kind) (380 ) (405 ) Balance at end of year $ 497 $ 523 |
Commitments
Commitments | 12 Months Ended |
Oct. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments Lease Commitments The Company leases certain real and personal property under non-cancelable operating leases. Certain leases require the Company to pay property taxes, insurance and routine maintenance and include renewal options and escalation clauses. Rent expense on operating leases was approximately $0.7 billion in fiscal 2016 and fiscal 2015 and approximately $0.8 billion in fiscal 2014 . Property under capital leases is comprised primarily of equipment and furniture. Capital lease assets included in Property, plant and equipment in the Consolidated Balance Sheets were $173 million and $203 million as of October 31, 2016 and 2015 , respectively. Accumulated depreciation on the property under capital lease was $161 million and $186 million as of October 31, 2016 and 2015 , respectively. As of October 31, 2016 , future minimum lease commitments on the Company's operating leases were as follows: Fiscal Year In millions 2017 $ 557 2018 464 2019 333 2020 257 2021 185 Thereafter 594 Less: Sublease rental income (169 ) Total $ 2,221 Unconditional Purchase Obligations At October 31, 2016 , the Company had unconditional purchase obligations of approximately $1.8 billion . These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. These unconditional purchase obligations are related principally to software maintenance and support services and other items. Unconditional purchase obligations exclude agreements that are cancelable without penalty. As of October 31, 2016 , future unconditional purchase obligations were as follows: Fiscal Year In millions 2017 $ 537 2018 529 2019 419 2020 175 2021 122 Thereafter 16 Total $ 1,798 |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Oct. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The Company includes investments which are accounted for using the equity method, under Investments in equity interests on the Company's Consolidated Balance Sheets. As of October 31, 2016 , the Company's Investments in equity interests primarily included $2.6 billion related to a 49% equity interest in H3C. Investment in H3C In May 2016, Tsinghua Holdings’ subsidiary, Unisplendour Corporation, purchased 51% of a new business named H3C, which is comprised of Hewlett Packard Enterprise’s former H3C Technologies and China-based servers, storage and technology services businesses which were previously reported within the EG segment. The Company retained a 49% interest in the new company, which it records as an equity method investment. In fiscal 2016 , the Company recorded its interest in the net earnings of H3C along with an adjustment to eliminate unrealized profits on intra-entity sales, and the amortization of basis difference, within earnings/loss from equity interests in the Consolidated and Combined Statements of Earnings. In order to identify the basis difference resulting from the sale of its portion of the H3C business, the Company was required to determine the fair value of the identifiable assets and assumed liabilities on the date of sale in the same manner as it would in a business combination. These determined fair values were compared with the asset and liability carrying values reported on the Company's Consolidated Balance Sheet as of the sale date; the resulting difference was considered basis difference. Any excess cost of the investment over the Company's proportional fair value of the H3C assets acquired and liabilities assumed was identified as equity method goodwill. The difference between the sale date carrying value of the Company's investment in H3C and its proportionate share of the net assets of H3C, which is the basis difference is summarized as follows: In millions Carrying value of investment in H3C $ 2,739 Proportionate share of net assets of H3C 205 Basis difference $ 2,534 The basis difference was allocated as follows: In millions Equity method goodwill $ 1,674 Intangible assets 749 In-process research and development 188 Deferred tax liabilities (152 ) Other 75 Basis difference $ 2,534 The Company amortizes the basis difference over the estimated useful lives of the assets that gave rise to this difference. The weighted-average life of the H3C intangible assets is five years and will be amortized using a straight-line method. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life. If an IPR&D project is abandoned, the Company will record the full basis difference charge for the value of the related intangible asset to its Consolidated and Combined Statements of Earnings in the period of abandonment. Equity method goodwill is not amortized or tested for impairment; instead the equity method investment is tested for impairment whenever factors indicate that the carrying value of the investment may not be recoverable. In fiscal 2016 , the Company recorded a Loss from equity interests of $76 million in the Consolidated and Combined Statement of Earnings, $93 million of which represented basis difference amortization, $15 million for elimination of profit on intra-entity sales and $32 million represented the Company's share of H3C's net income. This loss was reflected as a reduction in the carrying amount in Investments in equity interests in the Consolidated Balance Sheet as of October 31, 2016 . The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage and technology services. |
Overview and Summary of Signi28
Overview and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Prior to October 31, 2015, the Combined Financial Statements were derived from the Consolidated Financial Statements and accounting records of former Parent, as if the Company was operating on a standalone basis during the periods presented. From and after October 31, 2015, substantially all of the assets and liabilities and operations of the Company were transferred from former Parent to the Company, and Consolidated and Combined Financial Statements included the accounts of the Company and its wholly-owned subsidiaries in accordance with the separation agreement for the transfer from former Parent to the Company. These Consolidated and Combined Financial Statements of the Company were prepared in connection with the Separation and in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). Prior to October 31, 2015, the Combined and Consolidated Statements of Earnings and Comprehensive Income of the Company reflect allocations of general corporate expenses from former Parent including, but not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement, and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount, or other relevant measures. Management of the Company and former Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. The allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Former Parent's cash had not been assigned to the Company as of October 31, 2015 because those cash balances were not directly attributable to the Company. The Company reflected transfers of cash to and from former Parent's cash management system as a component of former Parent company investment on the Consolidated Balance Sheets. Former Parent's long-term debt had not been attributed to the Company prior to October 31, 2015 because former Parent's borrowings were not the legal obligation of the Company. As of October 31, 2015, substantially all of the assets and liabilities and operations were transferred from former Parent to the Company and the Consolidated Balance Sheet of the Company included the accounts of the Company and its wholly-owned subsidiaries. Additionally, subsequent to the Separation, the Company received a final cash allocation from HP Inc. and accrued certain general cross-indemnifications liabilities. See Note 14, "Related Party Transactions and Former Parent Company Investment", and Note 18, "Guarantees, Indemnifications and Warranties", for a full description of these items. Former Parent maintained various benefit and stock-based compensation plans at a corporate level and other benefit plans at a subsidiary level. The Company's employees participated in those programs and a portion of the cost of those plans was included in the Company's Consolidated and Combined Financial Statements. See Note 4, "Retirement and Post-Retirement Benefit Plans", and Note 5, "Stock-based Compensation", for a further description. |
Principles of Combination and Consolidation | Principles of Combination and Consolidation The accompanying Consolidated and Combined Financial Statements include the accounts of the Company and other subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated and combined businesses of the Company have been eliminated. Prior to the Separation, intercompany transactions between the Company and former Parent are considered to be effectively settled in the Consolidated and Combined Financial Statements at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated and Combined Statements of Cash Flows within financing activities and within the stockholders' equity section of the Consolidated Balance Sheets in Former Parent company investment. The Company accounts for investments in companies over which it has the ability to exercise significant influence but does not hold a controlling interest under the equity method of accounting, and the Company records its proportionate share of income or losses in Loss from equity interests in the Consolidated and Combined Statements of Earnings. The Company's proportionate share of losses in its equity method investments previously included in Interest and other, net, and Other, net, in the Consolidated and Combined Statements of Earnings and Statements of Cash Flows, respectively, for all prior periods, were reclassified to Loss from equity interests to conform to the current year presentation. Non-controlling interests are presented as a separate component within Total stockholders' equity in the Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Consolidated and Combined Statements of Earnings and are not presented separately, as they were not material for any period presented. Segment Realignment The Company has implemented certain segment and business unit realignments in order to align its segment financial reporting more closely with its current business structure. Reclassifications of certain prior year segment and business unit financial information have been made to conform to the current-year presentation. None of the changes impact the Company's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share ("EPS"). See Note 2, "Segment Information", for a further discussion of the Company's segment realignment. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company's Consolidated and Combined Financial Statements and accompanying notes. Actual results could differ materially from those estimates. |
Foreign Currency Translation | Foreign Currency Translation The Company predominately uses the U.S. dollar as its functional currency. Assets and liabilities denominated in non-U.S. currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Net revenue, costs and expenses denominated in non-U.S. currencies are recorded in U.S. dollars at the average rates of exchange prevailing during the period. The Company includes gains or losses from foreign currency remeasurement in Interest and other, net in the Consolidated and Combined Statements of Earnings and gains and losses from cash flow hedges in Net revenue as the hedged revenue is recognized. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and the Company records the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets. The effect of foreign currency exchange rates on cash and cash equivalents was not material for any of the fiscal years presented. |
Former Parent Company Investment | Former Parent Company Investment Former Parent company investment in the Consolidated Balance Sheets and Consolidated and Combined Statements of Stockholders' Equity represents former Parent's historical investment in the Company, the net effect of transactions with and allocations from former Parent and the Company's accumulated earnings. See Note 14, "Related Party Transactions and former Parent Company Investment", for further information about transactions between the Company and former Parent. Allocation of Corporate Expenses Prior to the Separation, the Consolidated and Combined Statements of Earnings and Comprehensive Income include an allocation of general corporate expenses from former Parent for certain management and support functions which are provided on a centralized basis within former Parent. These management and support functions include, but are not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement, and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount, or other relevant measures. These allocations were $3.6 billion and $4.2 billion in fiscal 2015 and 2014 , respectively. Management of the Company and former Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. These allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. |
Revenue Recognition | Revenue Recognition General The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services are rendered, the sales price or fee is fixed or determinable, and collectability is reasonably assured. Additionally, the Company recognizes hardware revenue on sales to channel partners, including resellers, distributors or value-added solution providers at the time of delivery when the channel partners have economic substance apart from the Company, and the Company has completed its obligations related to the sale. The Company generally recognizes revenue for its standalone software sales to channel partners on receipt of evidence that the software has been sold to a specific end user. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified refund or return rights. The Company reduces revenue for customer and distributor programs and incentive offerings, including price protection, rebates, promotions, other volume-based incentives, and expected returns, at the later of the date of revenue recognition or the date the sales incentive is offered. Future market conditions and product transitions may require the Company to take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered. For certain incentive programs, the Company estimates the number of customers expected to redeem the incentive based on historical experience and the specific terms and conditions of the incentive. In instances when revenue is derived from sales of third-party vendor products or services, the Company records revenue on a gross basis when the Company is a principal to the transaction and on a net basis when the Company is acting as an agent between the customer and the vendor. The Company considers several factors to determine whether it is acting as a principal or an agent, most notably whether the Company is the primary obligor to the customer, has established its own pricing and has inventory and credit risks. The Company reports revenue net of any taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Multiple element arrangements When a sales arrangement contains multiple elements or deliverables, such as hardware and software products, and/or services, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE") of selling price, if available, third-party evidence ("TPE") if VSOE of selling price is not available, or estimated selling price ("ESP") if neither VSOE of selling price nor TPE is available. The Company establishes VSOE of selling price using the price charged for a deliverable when sold separately and, in rare instances, using the price established by management having the relevant authority. The Company establishes TPE of selling price by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The Company establishes ESP based on management judgment considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life-cycle. Consideration is also given to market conditions such as competitor pricing strategies and technology industry life-cycles. In most arrangements with multiple elements, the Company allocates the transaction price to the individual units of accounting at inception of the arrangement based on their relative selling price. In multiple element arrangements that include software that is more-than-incidental, the Company allocates the transaction price to the individual units of accounting for the non-software deliverables and to the software deliverables as a group using the relative selling price of each of the deliverables in the arrangement based on the selling price hierarchy. If the arrangement contains more than one software deliverable, the transaction price allocated to the group of software deliverables is then allocated to each component software deliverable. The Company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value to the customer. For elements with no standalone value, the Company recognizes revenue consistent with the pattern of the undelivered elements. If the arrangement includes a customer-negotiated refund or return right or other contingency relative to the delivered items, and the delivery and performance of the undelivered items is considered probable and substantially within the Company's control, the delivered element constitutes a separate unit of accounting. In arrangements with combined units of accounting, changes in the allocation of the transaction price among elements may impact the timing of revenue recognition for the contract but will not change the total revenue recognized for the contract. Product revenue Hardware Under the Company's standard terms and conditions of sale, the Company transfers title and risk of loss to the customer at the time product is delivered to the customer and recognizes revenue accordingly, unless customer acceptance is uncertain or significant obligations to the customer remain. The Company reduces revenue for estimated customer returns, price protection, rebates and other programs offered under sales agreements established by the Company with its distributors and resellers. The Company records revenue from the sale of equipment under sales-type leases as product revenue at the inception of the lease. The Company accrues the estimated cost of post-sale obligations, including standard product warranties, based on historical experience at the time the Company recognizes revenue. Software The Company recognizes revenue from perpetual software licenses at the inception of the license term, assuming all revenue recognition criteria have been satisfied. Term-based software license revenue is generally recognized ratably over the term of the license. The Company uses the residual method to allocate revenue to software licenses at the inception of the arrangement when VSOE of fair value for all undelivered elements, such as post-contract customer support, exists and all other revenue recognition criteria have been satisfied. The Company recognizes revenue from maintenance and unspecified upgrades or updates provided on a when-and-if-available basis ratably over the period during which such items are delivered. The Company recognizes revenue for hosting or software-as-a-service ("SaaS") arrangements as the service is delivered, generally on a straight-line basis, over the contractual period of performance. In hosting arrangements, the Company considers the rights provided to the customer (e.g. whether the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty, and the feasibility of the customer to operate or contract with another vendor to operate the software) in determining whether the arrangement includes the sale of a software license. In hosting arrangements where software licenses are sold, license revenue is generally recognized according to whether perpetual or term licenses are sold, when all other revenue recognition criteria are satisfied. Services revenue The Company recognizes revenue from fixed-price support or maintenance contracts, including extended warranty contracts and software post-contract customer support agreements, ratably over the contract period and recognizes the costs associated with these contracts as incurred. For time and material contracts, the Company recognizes revenue as services are rendered and recognizes costs as they are incurred. The Company recognizes revenue from certain fixed-price contracts, such as consulting arrangements, as work progresses over the contract period on a proportional performance basis, as determined by the percentage of labor costs incurred to date compared to the total estimated labor costs of a contract. The Company recognizes revenue on fixed-price contracts for design and build projects (to design, develop and construct software and systems) using the percentage-of-completion method. The Company uses the cost-to-cost method to measure progress toward completion as determined by the percentage of cost incurred to date compared to the total estimated costs of the project. Estimates of total project costs for fixed-price contracts are regularly reassessed during the life of a contract. Provisions for estimated losses on fixed-priced contracts are recognized in the period when such losses become known. If reasonable and reliable cost estimates for a project cannot be made, the Company uses the completed contract method and recognizes revenue and costs upon service completion. The Company generally recognizes outsourcing services revenue in the period when the service is provided and the amount earned is not contingent on the occurrence of any future event. The Company recognizes revenue using an objective measure of output for unit-priced contracts. Revenue for fixed-price outsourcing contracts with periodic billings is recognized on a straight-line basis if the service is provided evenly during the contract term. Provisions for estimated losses on outsourcing arrangements are recognized in the period when such losses become probable and estimable. The Company recognizes revenue from operating leases on a straight-line basis as service revenue over the rental period. Financing income Sales-type and direct-financing leases produce financing income, which the Company recognizes at consistent rates of return over the lease term. Deferred revenue and deferred costs The Company records amounts invoiced to customers in excess of revenue recognized as deferred revenue until the revenue recognition criteria are satisfied. The Company records revenue that is earned and recognized in excess of amounts invoiced on services contracts as trade receivables. Deferred revenue represents amounts invoiced in advance for product support contracts, software customer support contracts, outsourcing startup services work, consulting and integration projects, product sales or leasing income. The Company recognizes costs associated with outsourcing contracts as incurred, unless such costs are considered direct and incremental to the startup phase of the contract, in which case the Company defers these costs during the startup phase and subsequently amortizes such costs over the period that outsourcing services are provided, once those services commence. The Company amortizes deferred contract costs on a straight-line basis over the remaining term of the contract unless facts and circumstances of the contract indicate a shorter period is more appropriate. Based on actual and projected contract financial performance indicators, the Company analyzes the recoverability of deferred contract costs using the undiscounted estimated cash flows of the contract over its remaining term. If such undiscounted cash flows are insufficient to recover the carrying amount of deferred contract costs and long-lived assets directly associated with the contract, the deferred contract costs are first impaired. If a cash flow deficiency remains after reducing the carrying amount of the deferred contract costs to zero, the Company evaluates any remaining long-lived assets related to that contract for impairment. |
Shipping and Handling | Shipping and Handling The Company includes costs related to shipping and handling in Cost of products. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is based on the measurement date fair value of the award and is recognized only for those awards expected to meet the service and performance vesting conditions on a straight-line basis over the requisite service period of the award. Stock-based compensation expense is determined at the aggregate grant level for service-based awards and at the individual vesting tranche level for awards with performance and/or market conditions. The forfeiture rate is estimated based on historical experience. Prior to November 1, 2015, the Company's employees participated in former Parent's stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company's employees as well as an allocation of former Parent's corporate and shared functional employee expenses. Stock Options Stock options granted under the Company's principal equity plans are generally non-qualified stock options, but the principal equity plans permitted some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. Stock options generally vest over three to four years from the date of grant. The exercise price of a stock option is equal to the closing price of the Company's common stock on the option grant date. The majority of the stock options issued by the Company contain only service vesting conditions. The Company also issued, to a lesser extent, performance-contingent stock options that vest only on the satisfaction of both service and market conditions. The Company and former Parent utilize the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The Company and former Parent estimate the fair value of stock options subject to performance-contingent vesting conditions using a combination of a Monte Carlo simulation model and a lattice model, as these awards contain market conditions. |
Retirement and Post-Retirement Plans | Retirement and Post-Retirement Plans The Company sponsors defined benefit pension plans worldwide, of which the most significant are in the United Kingdom. There are three pension plans in the UK which are all closed to new entrants, but under which, members continue to earn benefit accruals. All of these plans provide benefits based on final pay and years of service and generally require contributions from members. These plans are accounted for as single employer benefit plans. The net benefit plan obligations and the related benefit plan expense of these plans have been recorded in the Company's Consolidated and Combined Financial Statements for fiscal 2016. Prior to October 31, 2015 and with the exception of certain defined benefit pension plans, of which the Company was the sole sponsor, certain of Hewlett Packard Enterprise eligible employees, retirees and other former employees participated in certain U.S. and international defined benefit pension plans and other post-employment plans offered by former Parent. These plans, which included participants that were both Company employees and other employees of former Parent ("Shared" plans), were accounted for as multiemployer benefit plans and the related net benefit plan obligations were not included in the Company's historical Combined Balance Sheets through July 31, 2015. The related benefit plan expenses were allocated to the Company based on the Company's labor costs and allocations of corporate and other shared functional personnel. Certain benefit plans in the Company's operations only included active, retired and other former Company employees ("Direct" plans) and were accounted for as single employer benefit plans. Accordingly, the net benefit plan obligations and the related benefit plan expense of those plans have been recorded in the Company's Consolidated and Combined Financial Statements for all periods presented. The most significant of these Direct plans are located in the United Kingdom, Germany, Canada, and the United States. In connection with the Separation, during the three months ended October 31, 2015, former Parent transferred to the Company plan assets and liabilities related to newly-created single employer plans, primarily associated with Hewlett Packard Enterprise eligible employees, retirees and other former employees. The Company generally amortizes unrecognized actuarial gains and losses on a straight-line basis over the average remaining estimated service life or, in the case of closed plans, life expectancy of participants. In some cases, actuarial gains and losses are amortized using the corridor approach. See Note 4, "Retirement and Post-Retirement Benefit Plans", for a full description of these plans and the accounting and funding policies. |
Advertising | Advertising Costs to produce advertising are expensed as incurred during production. Costs to communicate advertising are expensed when the advertising is first run. Advertising expense totaled approximately $340 million in fiscal 2016, $224 million in fiscal 2015 and $220 million in fiscal 2014. |
Restructuring | Restructuring The Company records charges associated with former Parent-approved restructuring plans to reorganize one or more of the Company's business segments, to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes and accelerate innovation. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations and site closure and consolidation plans. The Company accrues for severance and other employee separation costs under these actions when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on existing plans, historical experiences and negotiated settlements. |
Taxes on Earnings | Taxes on Earnings For fiscal 2015 and prior, current income tax liabilities related to entities which filed jointly with former Parent are assumed to be immediately settled with former Parent and are relieved through the former Parent company investment account and the Net transfers to former Parent in the Consolidated and Combined Statements of Cash Flows. Income tax expense and other income tax-related information contained in these Consolidated and Combined Financial Statements are presented on a separate return basis, as if the Company filed its own tax returns. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company were a separate taxpayer and a standalone enterprise for the periods presented. As of November 1, 2015, Hewlett Packard Enterprise Company was formally separated from former Parent; as such, any current income tax liabilities generated by the Company will be settled by the Company and no longer included with tax filings of former Parent. The Company recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company records accruals for uncertain tax positions when the Company believes that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these accruals when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of adjustments for uncertain tax positions, effects of potential settlement of certain pre-Separation Hewlett-Packard Company income tax liabilities, as well as any related interest and penalties. Hewlett Packard Enterprise believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows. Hewlett Packard Enterprise is joint and severally liable for certain pre-Separation tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by federal, state and foreign tax authorities. The IRS is conducting an audit of former Parent’s 2009 - 2014 income tax returns. HP Inc. has received from the IRS Notices of Deficiency for its fiscal 1999 - 2000 and 2003 - 2005 tax years, and RARs for its fiscal 2001 - 2002 and 2006 - 2008 tax years. Hewlett Packard Enterprise has not provided for U.S. federal income and foreign withholding taxes on $26.2 billion of undistributed earnings from non-U.S. operations as of October 31, 2016 because the Company intends to reinvest such earnings indefinitely outside of the U.S. If the Company were to distribute these earnings, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. The Company will remit non-indefinitely reinvested earnings of its non-U.S. subsidiaries for which deferred U.S. federal and withholding taxes have been provided where excess cash has accumulated and the Company determines that it is advantageous for business operations, tax or cash management reasons. Deferred Income Taxes Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. For the purposes of the Company's Consolidated and Combined Balance Sheets in the period prior to the Separation, deferred tax balances and tax carryforwards and credits have been recorded under the Separate Return Method. The deferred tax balances reflected in the Company's Consolidated Balance Sheets in the period prior to the Separation have been recorded on a consolidated return basis and include tax attributes allocated to the Company at the time of the Separation. The inclusion of these tax attributes resulted in tax carryforwards and credits, which generated higher deferred income tax assets for the Company in the period prior to the Separation. |
Accounts Receivable | Accounts Receivable The Company establishes an allowance for doubtful accounts for accounts receivable. The Company records a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer's operating results or financial position. If there are additional changes in circumstances related to the specific customer, the Company further adjusts estimates of the recoverability of receivables. The Company maintains bad debt reserves for all other customers based on a variety of factors, including the use of third-party credit risk models that generate quantitative measures of default probabilities based on market factors, the financial condition of customers, the length of time receivables are past due, trends in the weighted-average risk rating for the portfolio, macroeconomic conditions, information derived from competitive benchmarking, significant one-time events, and historical experience. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. |
Financing arrangements | The Company participated in former Parent's third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers through July 31, 2015. From and after August 1, 2015, all of the Company's transactions are under its own third-party revolving short-term financing arrangements. These financing arrangements, which in certain cases provide for partial recourse, result in the transfer of the Company's trade receivables to a third party. The Company reflects amounts transferred to, but not yet collected from, the third party in Accounts receivable in the Consolidated Balance Sheets. For arrangements involving an element of recourse, the fair value of the recourse obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Balance Sheets. |
Concentrations of Risk | Concentrations of Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, investments, receivables from trade customers and contract manufacturers, financing receivables and derivatives. Prior to October 31, 2015, the Company participated in cash management, funding arrangements and risk management programs managed by former Parent. After October 31, 2015, in connection with the Separation, the Company maintains cash and cash equivalents, investments, derivatives, and certain other financial instruments with various financial institutions. These financial institutions are located in many different geographic regions, and the Company's policy is designed to limit exposure from any particular institution. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. The Company utilizes derivative contracts to protect against the effects of foreign currency and interest rate exposures. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. Credit risk with respect to accounts receivable and financing receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company performs ongoing credit evaluations of the financial condition of its customers and may require collateral, such as letters of credit and bank guarantees, in certain circumstances. As of October 31, 2016 and 2015, no single customer accounted for more than 10% of the Company's gross accounts receivable balance. The Company utilizes outsourced manufacturers around the world to manufacture company-designed products. The Company may purchase product components from suppliers and sell those components to its outsourced manufacturers thereby creating receivable balances from the outsourced manufacturers. The three largest outsourced manufacturer receivable balances collectively represented 83% and 80% of the Company's manufacturer receivables of $382 million and $414 million at October 31, 2016 and 2015, respectively. The Company includes the manufacturer receivables in Other current assets in the Consolidated Balance Sheets on a gross basis. The Company's credit risk associated with these receivables is mitigated wholly or in part by the amount the Company owes to these outsourced manufacturers, as the Company generally has the legal right to offset its payables to the outsourced manufacturers against these receivables. The Company does not reflect the sale of these components in revenue and does not recognize any profit on these component sales until the related products are sold by the Company, at which time any profit is recognized as a reduction to cost of sales. The Company obtains a significant number of components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a single source supplier, the deterioration of the Company's relationship with a single source supplier, or any unilateral modification to the contractual terms under which the Company is supplied components by a single source supplier could adversely affect the Company's revenue and gross margins. |
Inventory | Inventory The Company values inventory at the lower of cost or market. Cost is computed using standard cost which approximates actual cost on a first-in, first-out basis. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess or obsolescence determined primarily by future demand forecasts. |
Property, Plant and Equipment | Property, Plant and Equipment The Company states property, plant and equipment at cost less accumulated depreciation. The Company capitalizes additions and improvements and expenses maintenance and repairs as incurred. Depreciation expense is recognized on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives are five to 40 years for buildings and improvements and three to 15 years for machinery and equipment. The Company depreciates leasehold improvements over the life of the lease or the asset, whichever is shorter. The Company depreciates equipment held for lease over the initial term of the lease to the equipment's estimated residual value. The estimated useful lives of assets used solely to support a customer services contract generally do not exceed the term of the customer contract. On retirement or disposition, the asset cost and related accumulated depreciation are removed from the Consolidated Balance Sheets with any gain or loss recognized in the Consolidated and Combined Statements of Earnings. The Company capitalizes certain internal and external costs incurred to acquire or create internal use software, principally related to software coding, designing system interfaces and installation and testing of the software. The Company amortizes capitalized internal use software costs using the straight-line method over the estimated useful lives of the software, generally from three to five years. |
Software Development Costs | Software Development Costs The Company capitalizes costs incurred to acquire or develop software for resale subsequent to establishing technological feasibility for the software, if significant. The Company amortizes capitalized software development costs using the greater of the straight-line amortization method or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The estimated useful life for capitalized software for resale is generally three years or less. Software development costs incurred subsequent to establishing technological feasibility are generally not significant. |
Business Combinations | Business Combinations The Company includes the results of operations of acquired businesses in the Company's consolidated and combined results prospectively from the date of acquisition. The Company allocates the fair value of purchase consideration to the assets acquired including in-process research and development ("IPR&D"), liabilities assumed, and non-controlling interests in the acquired entity generally based on their fair values at the acquisition date. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life. If an IPR&D project is abandoned, the Company will record a charge for the value of the related intangible asset to the Company's Consolidated and Combined Statement of Earnings in the period it is abandoned. The excess of the fair value of purchase consideration over the fair value of the assets acquired, liabilities assumed and non-controlling interests in the acquired entity is recorded as goodwill. The primary items that generate goodwill include the value of the synergies between the acquired company and the Company and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred. |
Goodwill | Goodwill The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company is permitted to conduct a qualitative assessment to determine whether it is necessary to perform a two-step quantitative goodwill impairment test. The Company performs a quantitative test for all of its reporting units as part of its annual goodwill impairment test in the fourth quarter of each fiscal year. Goodwill is tested for impairment at the reporting unit level. As of October 31, 2016, the Company's reporting units are consistent with the reportable segments identified in Note 2, "Segment Information". In the first step of the impairment test, the Company compares the fair value of each reporting unit to its carrying amount. The Company estimates the fair value of its reporting units using a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows. The Company prepares cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, the Company estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The Company weights the fair value derived from the market approach depending on the level of comparability of these publicly traded companies to the reporting unit. When market comparables are not meaningful or not available, the Company estimates the fair value of a reporting unit using only the income approach. For the Software and Enterprise Services ("ES") reporting units, the Company primarily utilized their respective spin-off and merger transaction values to estimate fair value. If the fair value of a reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than its carrying amount, then the Company performs the second step of the goodwill impairment test to measure the amount of impairment loss, if any. In the second step, the Company measures the reporting unit's assets, including any unrecognized intangible assets, liabilities and non-controlling interests at fair value in a hypothetical analysis to calculate the implied fair value of goodwill for the reporting unit in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than its carrying amount, the difference is recorded as an impairment loss. |
Intangible Assets and Long-Lived Assets | Intangible Assets and Long-Lived Assets The Company reviews intangible assets with finite lives and long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of assets based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the undiscounted future cash flows are less than the carrying amount, the asset is impaired. The Company measures the amount of impairment loss, if any, as the difference between the carrying amount of the asset and its fair value using an income approach or, when available and appropriate, using a market approach. The Company amortizes intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from one to ten years. |
Debt and Marketable Equity Securities | Debt and Marketable Equity Securities Investments Debt and marketable equity securities are generally considered available-for-sale and are reported at fair value with unrealized gains and losses, net of applicable taxes, in Accumulated other comprehensive loss in the Consolidated Balance Sheets. Realized gains and losses for available-for-sale securities are calculated based on the specific identification method and included in Interest and other, net in the Consolidated and Combined Statements of Earnings. The Company monitors its investment portfolio for potential impairment on a quarterly basis. When the carrying amount of an investment in debt securities exceeds its fair value and the decline in value is determined to be other-than-temporary, the Company records an impairment charge to Interest and other, net in the amount of the credit loss and the balance, if any, is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets. |
Derivatives | Derivatives The Company uses derivative financial instruments, primarily forwards, swaps, and, at times, options, to hedge certain foreign currency and interest rate exposures. The Company also may use other derivative instruments not designated as hedges, such as forwards used to hedge foreign currency balance sheet exposures. The Company does not use derivative financial instruments for speculative purposes. See Note 12, "Financial Instruments", for a full description of the Company's derivative financial instrument activities and related accounting policies. Derivative Instruments The Company is a global company exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of its business. As part of its risk management strategy, the Company uses derivative instruments, primarily forward contracts, interest rate swaps and total return swaps to hedge certain foreign currency, interest rate and, to a lesser extent, equity exposures. The Company's objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, thereby reducing volatility of earnings or protecting the fair value of assets and liabilities. The Company does not have any leveraged derivatives and does not use derivative contracts for speculative purposes. The Company may designate its derivative contracts as fair value hedges, cash flow hedges or hedges of the foreign currency exposure of a net investment in a foreign operation ("net investment hedges"). Additionally, for derivatives not designated as hedging instruments, the Company categorizes those economic hedges as other derivatives. Derivative instruments directly attributable to the Company are recognized at fair value in the Consolidated Balance Sheets. The change in fair value of the derivative instruments is recognized in the Consolidated and Combined Statements of Earnings or Consolidated and Combined Statements of Comprehensive Income depending upon the type of hedge as further discussed below. The Company classifies cash flows from its derivative programs with the activities that correspond to the underlying hedged items in the Consolidated and Combined Statements of Cash Flows. As a result of its use of derivative instruments, the Company is exposed to the risk that its counterparties will fail to meet their contractual obligations. To mitigate counterparty credit risk, the Company has a policy of only entering into derivative contracts with carefully selected major financial institutions based on their credit ratings and other factors, and the Company maintains dollar risk limits that correspond to each financial institution's credit rating and other factors. The Company's established policies and procedures for mitigating credit risk include reviewing and establishing limits for credit exposure and periodically reassessing the creditworthiness of its counterparties. Master netting agreements also mitigate credit exposure to counterparties by permitting the Company to net amounts due from the Company to a counterparty against amounts due to the Company from the same counterparty under certain conditions. To further mitigate credit exposure to counterparties, the Company has collateral security agreements, which allows the Company to hold collateral from, or require the Company to post collateral to, counterparties when aggregate derivative fair values exceed contractually established thresholds which are generally based on the credit ratings of the Company and its counterparties. If the Company's credit rating falls below a specified credit rating, the counterparty has the right to request full collateralization of the derivatives' net liability position. Conversely, if the counterparty's credit rating falls below a specified credit rating, the Company has the right to request full collateralization of the derivatives' net liability position. Collateral is generally posted within two business days. The fair value of the Company's derivatives with credit contingent features in a net liability position was $9 million and $35 million at October 31, 2016 and 2015 , respectively, all of which were fully collateralized within two business days. Under the Company's derivative contracts, the counterparty can terminate all outstanding trades following a covered change of control event affecting the Company that results in the surviving entity being rated below a specified credit rating. This credit contingent provision did not affect the Company's financial position or cash flows as of October 31, 2016 and 2015 . Fair Value Hedges The Company issues long-term debt in U.S. dollars based on market conditions at the time of financing. The Company may enter into fair value hedges, such as interest rate swaps, to reduce the exposure of its debt portfolio to changes in fair value resulting from changes in interest rates by achieving a primarily U.S. dollar LIBOR-based floating interest rate. The swap transactions generally involve principal and interest obligations for U.S. dollar-denominated amounts. Alternatively, the Company may choose not to swap fixed for floating interest payments or may terminate a previously executed swap if it believes a larger proportion of fixed-rate debt would be beneficial. When investing in fixed-rate instruments, the Company may enter into interest rate swaps that convert the fixed interest payments into variable interest payments and may designate these swaps as fair value hedges. In fiscal 2015, concurrent with the issuance of fixed-rate Senior Notes, the Company entered into interest rate swaps to reduce the exposure of $9.5 billion of aggregate principal amount of fixed-rate Senior Notes to changes in fair value resulting from changes in interest rates by achieving LIBOR-based floating interest rate. See Note 13, "Borrowings", for more information related to the issuance of Senior Notes. For derivative instruments that are designated and qualify as fair value hedges, the Company recognizes the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated and Combined Statements of Earnings in the period of change. Cash Flow Hedges The Company uses forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted net revenue and, to a lesser extent, cost of sales, operating expenses, and intercompany loans denominated in currencies other than the U.S. dollar. The Company's foreign currency cash flow hedges mature generally within twelve months ; however, forward contracts associated with sales-type and direct-financing leases and intercompany loans extend for the duration of the lease or loan term, which typically range from two to five years. For derivative instruments that are designated and qualify as cash flow hedges, the Company initially records changes in fair value for the effective portion of the derivative instrument in Accumulated other comprehensive loss as a separate component of equity in the Consolidated Balance Sheets and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized in earnings. The Company reports the effective portion of its cash flow hedges in the same financial statement line item as changes in the fair value of the hedged item. Net Investment Hedges The Company uses forward contracts designated as net investment hedges to hedge net investments in certain foreign subsidiaries whose functional currency is the local currency. The Company records the effective portion of such derivative instruments together with changes in the fair value of the hedged items in Cumulative translation adjustment as a separate component of Equity in the Consolidated Balance Sheets. Other Derivatives Other derivatives not designated as hedging instruments consist primarily of forward contracts used to hedge foreign currency-denominated balance sheet exposures. The Company also uses total return swaps and, to a lesser extent, interest rate swaps, based on equity or fixed income indices, to hedge its executive deferred compensation plan liability. For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Interest and other, net in the Consolidated and Combined Statements of Earnings in the period of change. Hedge Effectiveness For interest rate swaps designated as fair value hedges, the Company measures hedge effectiveness by offsetting the change in fair value of the hedged items with the change in fair value of the derivative. For forward contracts designated as cash flow or net investment hedges, the Company measures hedge effectiveness by comparing the cumulative change in fair value of the hedge contract with the cumulative change in fair value of the hedged item, both of which are based on forward rates. The Company recognizes any ineffective portion of the hedge in the Consolidated and Combined Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Consolidated and Combined Statements of Earnings in the period they arise. |
Loss Contingencies | Loss Contingencies The Company is involved in various lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. The Company records a liability for contingencies when it believes it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. See Note 17, "Litigation and Contingencies", for a full description of the Company's loss contingencies and related accounting policies. |
Accounting Pronouncements | Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“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. Under current GAAP, current and deferred income taxes for intra-entity asset transfers are not recognized until the asset has been sold to an outside party. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is required to adopt the guidance in the first quarter of fiscal 2019. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated and Combined Financial Statements. 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 is required to adopt the guidance in the first quarter of fiscal 2019. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated and Combined 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 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. 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 Consolidated and Combined Financial Statements. In March 2016, the FASB amended the existing accounting standards for employee share-based payment arrangements. The amendments require all excess tax benefits and tax deficiencies associated with share-based payments to be recognized as income tax expense or income tax benefit, respectively, rather than as additional paid-in capital. The amendments also increase the amount an employer can withhold in order to cover income taxes on awards, allows companies to recognize forfeitures of awards as they occur, and requires companies to present excess tax benefits from stock-based compensation as an operating activity in the statement of cash flows rather than as a financing activity. The Company is required to adopt the guidance in the first quarter of fiscal 2018. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the impact of these amendments on its Consolidated and Combined Financial Statements. In February 2016, the FASB amended the existing 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 is required to adopt the guidance in the first quarter of fiscal 2020 using a modified retrospective approach. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated and Combined Financial Statements. In November 2015, the FASB amended the existing accounting standards for income taxes. The amendments require companies to report their deferred tax liabilities and deferred tax assets each as a single non-current item on their classified balance sheets. The Company elected to adopt the amendments in the first quarter of fiscal 2016 and applied them retrospectively to all periods presented, as permitted by the standard. The adoption of the amendments had no impact to its net earnings or cash flows from operations for any period presented. The following table presents the Consolidated Balance Sheet under the historical accounting method for deferred taxes and as adjusted to reflect the adoption of the amendments: October 31, 2015 Historical Accounting Method Effect of Adoption As Adjusted In millions Other current assets $ 7,677 $ (1,209 ) $ 6,468 Long-term financing receivables and other assets $ 11,020 $ (145 ) $ 10,875 Taxes on earnings $ (634 ) $ 158 $ (476 ) Other liabilities $ (10,098 ) $ 1,196 $ (8,902 ) In September 2015, the FASB amended the existing accounting standards to simplify the accounting for measurement period adjustments to provisional amounts recognized in a business combination. The amendments require all such adjustments to be recognized in the period they are determined. Adjustments related to previous reporting periods since the acquisition date must be disclosed by income statement line item, either on the face of the income statement or within the footnotes. The Company elected to early adopt the amendments in the first quarter of fiscal 2016, as permitted by the standard. The adoption of the amendments did not have a material impact on the Company's Consolidated and Combined Financial Statements. See Footnote 9, "Acquisitions and Divestitures", for additional information on measurement period adjustments recognized during the fiscal year ended October 31, 2016. In May 2015, the FASB amended the existing accounting standards for fair value measurements. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share as a practical expedient. The Company elected to adopt the amendments in the first quarter of fiscal 2016 and applied them retrospectively to all periods presented, as required by the standard. The adoption of the amendments had no impact to its net earnings or cash flows from operations for any period presented. In April 2015, the FASB amended the existing accounting standards for intangible assets. The amendments provide explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement, wherein the arrangements that do not convey a software license to the customer are accounted for as service contracts. The amendments also eliminate the practice of accounting for software licenses as executory contracts which may result in more software assets being capitalized. The Company is required to adopt the guidance in the first quarter of fiscal 2017; however early adoption is permitted, as is retrospective application. The adoption of these amendments is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In April 2015, the FASB amended the existing accounting standards for imputation of interest. The amendments require that debt issuance costs related to a recognized debt liability be presented on the classified balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected by these amendments. The Company is required to adopt the guidance in the first quarter of fiscal 2017. Early adoption is permitted. The amendments should be applied retrospectively with the adjusted balance sheet of each individual period presented, in order to reflect the period-specific effects of applying the new guidance. The adoption of these amendments is not expected to have a material impact on the Company's Consolidated and Combined Financial Statements. In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued an accounting standard update for a one year deferral of the effective date, with an option of applying the standard on the original effective date, which for the Company is the first quarter of fiscal 2018. In accordance with this deferral, the Company is required to adopt these amendments in the first quarter of fiscal 2019. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently assessing the impact of these amendments and the transition alternatives on its Consolidated and Combined Financial Statements. |
Segment Policy | Segment Policy Hewlett Packard Enterprise derives the results of its business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those the consolidated company uses. The CODM measures the performance of each segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to allocate resources to each of the segments. Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by FS. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements. Hewlett Packard Enterprise periodically engages in intercompany advanced royalty payment and licensing arrangements that may result in advance payments between subsidiaries. Revenues from these intercompany arrangements are deferred and recognized as earned over the term of the arrangement by the Hewlett Packard Enterprise legal entities involved in such transactions; however, these advanced payments are eliminated from revenues as reported by Hewlett Packard Enterprise and its business segments. As disclosed in Note 6, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $3.7 billion and $5.0 billion during fiscal 2016 and 2015 respectively. In these transactions, the payments were received in the U.S. from a foreign consolidated affiliate, with a deferral of intercompany revenues over the term of the arrangements, approximately 5 years . The impact of these intercompany arrangements is eliminated from both Hewlett Packard Enterprise's consolidated and segment revenues. Financing interest in the Consolidated and Combined Statements of Earnings reflects interest expense on borrowing- and funding-related activity associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS. Prior to October 9, 2015, such financing interest expense resulted from debt issued by former Parent. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses which it manages at the corporate level. These unallocated costs include certain corporate governance costs, stock-based compensation expense, amortization of intangible assets, restructuring charges, acquisition and other related charges, separation costs, defined benefit plan settlement charges, impairment of data center assets and gains on the divestitures of H3C and MphasiS |
Investment Policy | Investment Policy The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans' investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans' investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures. Outside the U.S., asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees for the specific plan. |
Fair Value Of Pension Plan Assets Policy | The following is a description of the valuation methodologies used to measure plan assets at fair value. Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. For corporate and government debt securities traded on active exchanges, fair value is based on observable quoted prices. The valuation of alternative investments, such as limited partnerships and joint ventures, may require significant management judgment. For alternative investments, valuation is based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. Depending on the amount of management judgment, the lack of near-term liquidity, and the absence of quoted market prices, these assets are classified in Level 2 or Level 3 of the fair value hierarchy. Further, depending on how quickly the Company can redeem its hedge fund investments, and the extent of any adjustments to fair value, hedge funds are classified in either Level 2 or Level 3 of the fair value hierarchy. The valuation for some of these assets requires judgment due to the absence of quoted market prices, and these assets are generally classified in either Level 2 or Level 3 of the fair value hierarchy. Cash and cash equivalents includes money market funds, which are valued based on cost, which approximates fair value. Other assets, including insurance group annuity contracts, were classified in the fair value hierarchy based on the lowest level input (e.g., quoted prices and observable inputs) that is significant to the fair value measure in its entirety. |
Basis for Expected Long-Term Rate of Return on Plan Assets Policy | Basis for Expected Long-Term Rate of Return on Plan Assets The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country's specific inflation outlook. Because the Company's investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees. |
Financing Receivables Allowance for Credit Loss and Reserves Policy | Allowance for Doubtful Accounts The allowance for doubtful accounts for financing receivables is comprised of a general reserve and a specific reserve. The Company maintains general reserve percentages on a regional basis and bases such percentages on several factors, including consideration of historical credit losses and portfolio delinquencies, trends in the overall weighted-average risk rating of the portfolio, current economic conditions and information derived from competitive benchmarking. The Company excludes accounts evaluated as part of the specific reserve from the general reserve analysis. The Company establishes a specific reserve for financing receivables with identified exposures, such as customer defaults, bankruptcy or other events, that make it unlikely the Company will recover its investment. For individually evaluated receivables, the Company determines the expected cash flow for the receivable, which includes consideration of estimated proceeds from disposition of the collateral, and calculates an estimate of the potential loss and the probability of loss. For those accounts where a loss is considered probable, the Company records a specific reserve. The Company generally writes off a receivable or records a specific reserve when a receivable becomes 180 days past due, or sooner if the Company determines that the receivable is not collectible. Credit Quality Indicators Due to the homogenous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. |
Financing Receivables, Non-Accrual and Past Due Status Policy | Non-Accrual and Past-Due Financing Receivables The Company considers a financing receivable to be past due when the minimum payment is not received by the contractually specified due date. The Company generally places financing receivables on non-accrual status, which is suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due. Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible; however, if there is doubt regarding the ultimate collectability of the recorded financing receivable, all cash receipts are applied to the carrying amount of the financing receivable, which is the cost recovery method. In certain circumstances, such as when the Company deems a delinquency to be of an administrative nature, financing receivables may accrue interest after becoming 90 days past due. The non-accrual status of a financing receivable may not impact a customer's risk rating. After all of a customer's delinquent principal and interest balances are settled, the Company may return the related financing receivable to accrual status. |
Fair Value | Valuation Techniques Cash Equivalents and Investments: The Company holds time deposits, money market funds, mutual funds, other debt securities primarily consisting of corporate and foreign government notes and bonds, and common stock and equivalents. The Company values cash equivalents and equity investments using quoted market prices, alternative pricing sources, including net asset value, or models utilizing market observable inputs. The fair value of debt investments was based on quoted market prices or model-driven valuations using inputs primarily derived from or corroborated by observable market data, and, in certain instances, valuation models that utilize assumptions which cannot be corroborated with observable market data. Derivative Instruments: The Company uses forward contracts, interest rate and total return swaps to hedge certain foreign currency and interest rate exposures. The Company uses industry standard valuation models to measure fair value. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves, the Company and counterparties' credit risk, foreign currency exchange rates, and forward and spot prices for currencies and interest rates. See Note 12, "Financial Instruments", for a further discussion of the Company's use of derivative instruments. Other Fair Value Disclosures Short- and Long-Term Debt: The Company estimates the fair value of its debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering its own credit risk. The portion of the Company's debt that is hedged is reflected in the Consolidated Balance Sheets as an amount equal to the debt's carrying amount and a fair value adjustment representing changes in the fair value of the hedged debt obligations arising from movements in benchmark interest rates. At October 31, 2016, the estimated fair value of the Company's short-term and long-term debt was $16.3 billion and the carrying value was $16.1 billion . As of October 31, 2015, the estimated fair value of the Company's short-term and long-term debt approximated its carrying value of $15.8 billion . If measured at fair value in the Consolidated Balance Sheets, short-term and long-term debt would be classified in Level 2 of the fair value hierarchy. Other Financial Instruments: For the balance of the Company's financial instruments, primarily accounts receivable, accounts payable and financial liabilities included in other accrued liabilities, the carrying amounts approximate fair value due to their short maturities. If measured at fair value in the Consolidated Balance Sheets, these other financial instruments would be classified in Level 2 or Level 3 of the fair value hierarchy. Non-Marketable Equity Investments and Non-Financial Assets: The Company's non-marketable equity investments and non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value in the period an impairment charge is recognized. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified in Level 3 of the fair value hierarchy. In fiscal 2015, the Company determined that it would exit certain data centers. The Company conducted an analysis of the respective asset groups to determine if the carrying value was greater than the fair value. As a result of this assessment, the Company recorded a $136 million impairment charge to Impairment of data center assets on the Consolidated and Combined Statements of Earnings. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair Value Hierarchy The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2—Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Level 3—Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to observable inputs and lowest priority to unobservable inputs. |
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 awards, stock options, and performance-based awards. For periods prior to fiscal 2015, the Company calculated basic net EPS using the net earnings and number of Hewlett-Packard Company shares outstanding as of October 31, 2015. On November 1, 2015, the distribution date, Hewlett-Packard Company shareholders received one share of HPE common stock for every share of Hewlett-Packard Company common stock held as of the record date, October 21, 2015. |
Warranties | Warranties The Company accrues the estimated cost of product warranties at the time it recognizes revenue. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates, average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of the Company's baseline experience, affect the estimated warranty obligation. |
Overview and Summary of Signi29
Overview and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncement, Early Adoption | The following table presents the Consolidated Balance Sheet under the historical accounting method for deferred taxes and as adjusted to reflect the adoption of the amendments: October 31, 2015 Historical Accounting Method Effect of Adoption As Adjusted In millions Other current assets $ 7,677 $ (1,209 ) $ 6,468 Long-term financing receivables and other assets $ 11,020 $ (145 ) $ 10,875 Taxes on earnings $ (634 ) $ 158 $ (476 ) Other liabilities $ (10,098 ) $ 1,196 $ (8,902 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Revenue and Earnings (Loss) from Operations, by Segment | Enterprise Enterprise Software Financial Corporate Total In millions 2016 Net revenue $ 26,017 $ 18,094 $ 2,912 $ 3,097 $ 3 $ 50,123 Intersegment net revenue and other 1,202 778 283 93 — 2,356 Total segment net revenue $ 27,219 $ 18,872 $ 3,195 $ 3,190 $ 3 $ 52,479 Earnings (loss) from operations $ 3,459 $ 1,457 $ 749 $ 336 $ (348 ) $ 5,653 2015 Net revenue $ 26,668 $ 19,010 $ 3,308 $ 3,114 $ 7 $ 52,107 Intersegment net revenue and other 1,239 796 314 102 — 2,451 Total segment net revenue $ 27,907 $ 19,806 $ 3,622 $ 3,216 $ 7 $ 54,558 Earnings (loss) from operations $ 3,862 $ 1,019 $ 788 $ 349 $ (423 ) $ 5,595 2014 Net revenue $ 26,812 $ 21,297 $ 3,609 $ 3,401 $ 4 $ 55,123 Intersegment net revenue and other 915 1,101 324 97 — 2,437 Total segment net revenue $ 27,727 $ 22,398 $ 3,933 $ 3,498 $ 4 $ 57,560 Earnings (loss) from operations $ 3,909 $ 818 $ 871 $ 389 $ (245 ) $ 5,742 |
Schedule of Reconciliation of Revenues and Earnings before Taxes from Segments to Combined and Consolidated | The reconciliation of segment operating results to Hewlett Packard Enterprise consolidated and combined results was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions Net Revenue: Total segments $ 52,479 $ 54,558 $ 57,560 Elimination of intersegment net revenue and other (2,356 ) (2,451 ) (2,437 ) Total Hewlett Packard Enterprise consolidated and combined net revenue $ 50,123 $ 52,107 $ 55,123 Earnings before taxes: Total segment earnings from operations $ 5,653 $ 5,595 $ 5,742 Corporate and unallocated costs and eliminations (598 ) (454 ) (592 ) Stock-based compensation expense (558 ) (565 ) (427 ) Amortization of intangible assets (755 ) (852 ) (906 ) Restructuring charges (1,236 ) (954 ) (1,471 ) Acquisition and other related charges (178 ) (89 ) (11 ) Separation costs (598 ) (797 ) — Defined benefit plan settlement charges — (225 ) — Impairment of data center assets — (136 ) — Gain on H3C and MphasiS divestitures 2,420 — — Interest and other, net (312 ) (51 ) (91 ) Tax indemnification adjustments 317 — — Loss from equity interests (76 ) (2 ) — Total Hewlett Packard Enterprise consolidated and combined earnings before taxes $ 4,079 $ 1,470 $ 2,244 |
Schedule of Reconciliation of Assets from Segments to Combined and Consolidated | Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated assets were as follows: As of October 31, 2016 2015 In millions Enterprise Group $ 26,163 $ 27,987 Enterprise Services 9,563 11,581 Software 9,425 9,996 Financial Services 13,594 13,163 Corporate Investments 161 83 Corporate and unallocated assets 20,773 17,106 Total Hewlett Packard Enterprise consolidated assets (1) $ 79,679 $ 79,916 _______________________________________________________________________________ (1) The Company elected to adopt the amendments prescribed by ASU 2015-17 related to deferred tax assets and liabilities in the first quarter of fiscal 2016 and applied them retrospectively, as required by the standard. The total assets by segment and total Hewlett Packard Enterprise consolidated assets for fiscal 2015 were restated accordingly. |
Schedule of net revenue by geographical areas | Net revenue by country in which Hewlett Packard Enterprise operates was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. $ 19,581 $ 20,063 $ 20,833 United Kingdom 5,074 5,379 5,661 Other countries 25,468 26,665 28,629 Total net revenue $ 50,123 $ 52,107 $ 55,123 |
Schedule of net property, plant and equipment by geographical areas | Net property, plant and equipment by country in which Hewlett Packard Enterprise operates was as follows: As of October 31, 2016 2015 In millions U.S. $ 4,768 $ 4,851 United Kingdom 912 955 Other countries 3,956 4,080 Total net property, plant and equipment $ 9,636 $ 9,886 |
Schedule of Revenue by Segment and Business Unit | Net revenue by segment and business unit was as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions Servers $ 14,019 $ 14,219 $ 13,401 Technology Services 7,160 7,662 8,383 Storage 3,065 3,180 3,315 Networking 2,975 2,846 2,628 Enterprise Group 27,219 27,907 27,727 Infrastructure Technology Outsourcing 11,425 12,107 14,038 Application and Business Services 7,447 7,699 8,360 Enterprise Services 18,872 19,806 22,398 Software 3,195 3,622 3,933 Financial Services 3,190 3,216 3,498 Corporate Investments 3 7 4 Total segment net revenue 52,479 54,558 57,560 Eliminations of intersegment net revenue and other (2,356 ) (2,451 ) (2,437 ) Total net revenue $ 50,123 $ 52,107 $ 55,123 |
Restructuring (Tables)
Restructuring (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Plans | Restructuring activities related to the Company's employees and infrastructure (“Direct Restructuring”), summarized by plan, are presented in the table below: Fiscal 2015 Plan Fiscal 2012 Plan Other Plans Employee Infrastructure Employee Infrastructure Employee Infrastructure Total Liability as of $ — $ — $ 712 $ 37 $ 9 $ 120 $ 878 Charges — — 1,092 253 — (5 ) 1,340 Cash payments — — (978 ) (198 ) (1 ) (62 ) (1,239 ) Non-cash items — — (89 ) (1 ) — — (90 ) Liability as of — — 737 91 8 53 889 Charges 351 1 542 73 (4 ) (9 ) 954 Cash payments — (1 ) (884 ) (116 ) — (20 ) (1,021 ) Non-cash items — — (74 ) (3 ) (3 ) — (80 ) Liability as of 351 — 321 45 1 24 742 Charges 932 217 88 1 — (2 ) 1,236 Cash payments (615 ) (132 ) (263 ) (22 ) — (11 ) (1,043 ) Non-cash items (39 ) (50 ) (7 ) (1 ) — (1 ) (98 ) Liability as of $ 629 $ 35 $ 139 $ 23 $ 1 $ 10 $ 837 Total costs incurred to date as of October 31, 2016 $ 1,283 $ 218 $ 3,980 $ 546 $ 1,997 $ 1,127 $ 9,151 Total expected costs to be incurred as of October 31, 2016 $ 2,158 $ 451 $ 3,980 $ 546 $ 1,997 $ 1,127 $ 10,259 |
Retirement and Post-Retiremen32
Retirement and Post-Retirement Benefit Plans (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of net pension benefit (credit) costs | The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated and Combined Statements of Earnings for fiscal 2016, 2015 and 2014 are presented in the table below. In addition, the table includes costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015. For the fiscal years ended October 31, 2016 2015 2014 2016 2015 2014 2016 2015 2014 U.S. Defined Non-U.S. Defined Post-Retirement In millions Service cost $ — $ — $ — $ 254 $ 121 $ 74 $ 3 $ — $ — Interest cost — 16 15 549 337 283 6 1 — Expected return on plan assets — — — (983 ) (570 ) (364 ) (2 ) — — Amortization and deferrals: Actuarial loss — 2 2 311 218 82 (3 ) — — Prior service benefit — — — (24 ) (6 ) (2 ) — (1 ) — Net periodic benefit cost — 18 17 107 100 73 4 — — Curtailment gain — — — (5 ) — (1 ) — — — Settlement loss — — — 9 4 8 — — — Special termination benefits — — — 25 18 39 — — — Net benefit cost $ — $ 18 $ 17 $ 136 $ 122 $ 119 $ 4 $ — $ — |
Schedule of weighted average assumptions used to calculate net benefit (credit) cost | The weighted-average assumptions used to calculate net pension benefit cost for Direct plans in fiscal 2016, 2015 and 2014 and for costs related to the plans transferred from former Parent in the fourth quarter of fiscal 2015 were as follows: For the fiscal years ended October 31, 2016 2015 2014 2016 2015 2014 2016 2015 2014 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans Discount rate 3.8 % 4.4 % 4.8 % 3.0 % 3.0 % 4.2 % 4.6 % 4.7 % — Expected increase in compensation levels 2.0 % — — 2.5 % 2.4 % 2.8 % — — — Expected long-term return on plan assets — — — 6.2 % 6.9 % 7.8 % 4.0 % — — |
Schedule of funded status of the direct plans | The funded status of the plans was as follows: As of October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Non-U.S. Defined Post-Retirement In millions Change in fair value of plan assets: Fair value—beginning of year $ — $ — $ 16,624 $ 5,098 $ 40 $ — Transfer from former Parent (1) — — — 11,667 — 40 Acquisition/divestiture/addition/deletion of plans (2) — — 138 (4 ) — — Actual return on plan assets — — 2,104 512 1 — Employer contributions — 21 328 132 3 1 Participant contributions — — 41 7 6 — Benefits paid — (21 ) (518 ) (273 ) (3 ) (1 ) Settlement — — (33 ) (8 ) — — Currency impact — — (2,022 ) (507 ) — — Fair value—end of year — — 16,662 16,624 47 40 Change in benefit obligation: Projected benefit obligation—beginning of year 7 370 19,439 7,335 139 — Merged into former Parent's Shared plan (3) — (365 ) — — — — Transfer from former Parent (1) — 7 — 12,262 — 150 Acquisition/divestiture/addition/deletion of plans (2) — — (20 ) (3 ) — — Service cost — — 254 121 3 — Interest cost — 16 549 337 6 1 Participant contributions — — 41 7 6 — Actuarial loss (gain) — — 3,018 409 6 (10 ) Benefits paid — (21 ) (518 ) (273 ) (3 ) (1 ) Plan amendments — — 1 (82 ) — — Curtailment — — (18 ) — — — Settlement — — (33 ) (8 ) — — Special termination benefits — — 25 18 — — Currency impact — — (2,374 ) (684 ) 1 (1 ) Projected benefit obligation—end of year 7 7 20,364 19,439 158 139 Funded status at end of year $ (7 ) $ (7 ) $ (3,702 ) $ (2,815 ) $ (111 ) $ (99 ) Accumulated benefit obligation $ 7 $ 7 $ 19,829 $ 18,706 $ — $ — _______________________________________________________________________________ (1) In fiscal 2015, in connection with the Separation, former Parent transferred plan assets and liabilities from former Parent's shared plans to established Company plans. (2) Primarily attributable to a business divestiture of outsourcing services in Germany and a Netherlands plan data review that transferred HPI retirees to HPE. (3) In October 2015, the Company transferred three unfunded non-qualified U.S. defined benefit plans to HPI. |
Schedule of weighted-average assumptions used to calculate the projected benefit obligations | The weighted-average assumptions used to calculate the projected benefit obligations were as follows: For the fiscal years ended October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans Discount rate 3.2 % 3.8 % 2.0 % 3.0 % 4.2 % 4.6 % Expected increase in compensation levels 2.0 % 2.0 % 2.4 % 2.5 % — — |
Schedule of net amount recognized for the direct plans in the entity's Combined Balance Sheets | The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows: As of October 31, 2016 2015 2016 2015 2016 2015 U.S. Defined Non-U.S. Defined Post-Retirement In millions Noncurrent assets $ — $ — $ 378 $ 495 $ — $ — Current liabilities (2 ) (2 ) (43 ) (38 ) (3 ) (3 ) Noncurrent liabilities (5 ) (5 ) (4,037 ) (3,272 ) (108 ) (96 ) Funded status at end of year $ (7 ) $ (7 ) $ (3,702 ) $ (2,815 ) $ (111 ) $ (99 ) |
Summary of pre-tax net actuarial loss and prior service benefit recognized in accumulated other comprehensive loss for direct defined benefit plans | The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in Accumulated other comprehensive loss for the defined benefit plans: As of October 31, 2016 U.S. Defined Non-U.S. Defined Post-Retirement In millions Net actuarial loss (gain) $ — $ 5,800 $ (9 ) Prior service benefit — (184 ) — Total recognized in accumulated other comprehensive loss $ — $ 5,616 $ (9 ) |
Summary of actuarial loss and prior service benefit for direct plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit) | The following table summarizes the net actuarial loss and prior service benefit for plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit) during the next fiscal year. As of October 31, 2016 U.S. Defined Non-U.S. Defined Post-Retirement In millions Net actuarial loss (gain) $ — $ 446 $ (3 ) Prior service benefit — (24 ) — Total expected to be recognized in net periodic benefit cost (credit) $ — $ 422 $ (3 ) |
Schedule of direct defined benefit plans with projected benefit obligations exceeding the fair value of plan assets | Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows: As of October 31, 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans In millions Aggregate fair value of plan assets $ — $ — $ 10,508 $ 8,510 Aggregate projected benefit obligation $ 7 $ 7 $ 14,587 $ 11,820 |
Schedule of direct defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets | Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows: As of October 31, 2016 2015 2016 2015 U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans In millions Aggregate fair value of plan assets $ — $ — $ 10,171 $ 8,449 Aggregate accumulated benefit obligation $ 7 $ 7 $ 13,765 $ 11,195 |
Schedule of fair value of direct plan non-U.S. defined benefit plan assets by asset category within the fair value hierarchy | The table below sets forth the fair value of non-U.S defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2016 and 2015. As of As of Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Asset Category: Equity securities U.S. $ 706 $ 34 $ — $ 740 $ 772 $ 65 — $ 837 Non-U.S. 1,022 227 84 1,333 1,910 408 68 2,386 Debt securities Corporate — 2,558 — 2,558 — 2,646 — 2,646 Government (1) — 805 — 805 — 843 — 843 Alternative investments Private Equity (2) — 4 68 72 — 1 68 69 Hybrids (3) — 458 — 458 — 2,576 — 2,576 Hybrids at NAV (4) 2,851 343 Hedge Funds (5) — 148 87 235 11 73 236 320 Common Contractual Funds at NAV (6) Equities at NAV 3,125 2,821 Fixed Income at NAV 948 993 Emerging Markets at NAV 955 844 Alternative investments at NAV 367 297 Real Estate Funds 215 269 307 791 447 33 571 1,051 Insurance Group Annuity Contracts — 38 63 101 — 48 69 117 Cash and Cash Equivalents (7) 1,061 — — 1,061 372 — — 372 Other (8) 71 69 122 262 61 13 35 109 Total $ 3,075 $ 4,610 $ 731 $ 16,662 $ 3,573 $ 6,706 $ 1,047 $ 16,624 _______________________________________________________________________________ (1) Includes debt issued by national, state and local governments and agencies. (2) Includes limited partnerships such as equity, buyout, venture capital, real estate, and other similar funds that invest in the U.S. and internationally where foreign currencies are hedged. (3) Includes a fund that invests in both private and public equities primarily in the U.S. and the United Kingdom, as well as emerging markets across all sectors. The fund also holds fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the fund includes units in transferable securities, collective investment schemes, money market funds, cash, and deposits. (4) Includes pooled funds that invest: a. in government bonds and derivative instruments such as interest rate swaps, future contracts and repurchase agreements with the objective to provide nominal and/or inflation-linked returns ( $2,478 million and $0 million at October 31, 2016 and 2015, respectively); b. in various worldwide equity index funds with the objective to provide returns that are consistent with the FTSE All World Developed Index ( $373 million and $343 million at October 31, 2016 and 2015, respectively). While the funds are not publicly traded, the custodian strikes a net asset value at least monthly. There are no redemption restrictions or future commitments on these investments. (5) Includes limited partnerships that invest both long and short primarily in common stocks and credit, relative value, event driven equity, distressed debt and macro strategies. Management of the hedge funds has the ability to shift investments from value to growth strategies, from small to large capitalization stocks and bonds, and from a net long position to a net short position. (6) HP Invest Common Contractual Fund (CCF) is an investment arrangement in which institutional investors pool their assets. Units may be acquired in six different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund’s investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments. (7) Includes cash and cash equivalents such as short-term marketable securities. (8) Includes international insured contracts, derivative instruments and unsettled transactions. |
Schedule of changes in fair value measurements of Level 3 investments for Direct non-U.S. defined benefit plans | Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows: Fiscal year ended October 31, 2016 Alternative Equity Private Hedge Real Insurance Other Total In millions Balance at beginning of year $ 68 $ 68 $ 236 $ 571 $ 69 $ 35 $ 1,047 Actual return on plan assets: Relating to assets held at the reporting date 16 (1 ) (35 ) (96 ) (2 ) (1 ) (119 ) Relating to assets sold during the period — 4 — — (3 ) — 1 Purchases, sales, and settlements — (3 ) (11 ) 2 (3 ) 82 67 Transfers in and/or out of Level 3 — — (103 ) (170 ) 2 6 (265 ) Balance at end of year $ 84 $ 68 $ 87 $ 307 $ 63 $ 122 $ 731 Fiscal year ended October 31, 2015 Alternative Equity Private Hedge Real Insurance Other Total In millions Balance at beginning of year $ — $ 28 $ — $ 336 $ 5 $ — $ 369 Transfer from former Parent (1) 81 19 192 23 58 34 407 Actual return on plan assets: Relating to assets held at the reporting date (13 ) (1 ) 7 23 4 1 21 Relating to assets sold during the period — 5 — — — — 5 Purchases, sales, and settlements — 10 36 15 — — 61 Transfers in and/or out of Level 3 — 7 1 174 2 — 184 Balance at end of year $ 68 $ 68 $ 236 $ 571 $ 69 $ 35 $ 1,047 ______________________________________________________________________________ (1) In connection with the Separation, former Parent transferred plan assets from former Parent's shared plans to established Company plans |
Schedule of weighted-average target and actual asset allocations across the benefit plans | The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans and post-retirement benefit plan were as follows: Non-U.S. Defined Post-Retirement Plan Assets Plan Assets Asset Category 2016 2016 2015 2016 2016 2015 Public equity securities 38.3 % 43.4 % — — Private/other equity securities 22.5 % 19.8 % — — Real estate and other 6.3 % 7.0 % — — Equity-related investments 64.7 % 67.1 % 70.2 % — — — Debt securities 34.5 % 26.5 % 27.6 % 90.0 % 90.2 % 97.2 % Cash and cash equivalents 0.8 % 6.4 % 2.2 % 10.0 % 9.8 % 2.8 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % |
Schedule of estimated future benefits payable for the Company's direct retirement plans | As of October 31, 2016, estimated future benefits payments for the Company's retirement plans were as follows: Fiscal year U.S. Defined Benefit Plans Non-U.S. Defined Benefit Plans Post-Retirement Benefit Plans In millions 2017 $ 2 $ 527 $ 4 2018 — 505 5 2019 1 542 6 2020 — 579 7 2021 1 608 8 Next five fiscal years to October 31, 2026 2 3,515 54 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Share-based compensation | |
Schedule of stock based compensation expense and the resulting tax benefits | Stock-based compensation expense and the resulting tax benefits recognized by the Company were as follows: Fiscal years ended October 31, 2016 2015 2014 In millions Stock-based compensation expense $ 597 $ 565 $ 427 Income tax benefit (181 ) (165 ) (141 ) Stock-based compensation expense, net of tax $ 416 $ 400 $ 286 |
Schedule of restricted stock award activity | For fiscal 2016, the activity summarized in the table below is related to restricted stock held by Company employees under the Plan. For fiscal 2015 and 2014, the activity summarized in the table below is related to restricted stock held by Company employees under former Parent's Plans. Fiscal years ended October 31, 2016 2015 2014 Shares Weighted- Shares Weighted- Shares Weighted- In thousands In thousands In thousands Outstanding at beginning of year — $ — 24,496 $ 24 18,170 $ 20 Converted from former Parent's plan 42,012 $ 15 — $ — — $ — Granted and assumed through acquisition (1) 32,752 $ 15 19,601 $ 35 15,820 $ 28 Vested (12,747 ) $ 15 (21,860 ) $ 26 (7,893 ) $ 24 Forfeited (4,696 ) $ 15 (1,819 ) $ 30 (1,601 ) $ 22 Employee transition (2) — $ — 3,982 $ 33 — $ — Outstanding at end of year 57,321 $ 15 24,400 $ 32 24,496 $ 24 ________________________________________________________________________ (1) Includes a one-time restricted stock unit retention grant of approximately 5 million shares in fiscal 2016. (2) The Employee transition amounts consist of restricted stock award activity for employees transitioning between the Company and former Parent. |
Stock Options | |
Share-based compensation | |
Schedule of weighted-average fair value and the assumptions used to measure fair value | The weighted-average fair value and the assumptions used to measure fair value were as follows: Fiscal years ended October 31, 2016 2015 2014 Weighted-average fair value (1) $ 4 $ 8 $ 7 Expected volatility (2) 31.1 % 26.8 % 33.1 % Risk-free interest rate (3) 1.7 % 1.7 % 1.8 % Expected dividend yield (4) 1.5 % 1.8 % 2.1 % Expected term in years (5) 5.4 5.9 5.7 _______________________________________________________________________________ (1) For fiscal 2016, the weighted-average fair value was based on stock options granted under the Plan during the period. For fiscal 2015 and 2014, the weighted-average fair value was based on stock options granted under former Parent's Plan during the respective periods. (2) For options granted in fiscal 2016, expected volatility was estimated using the average historical volatility of selected peer companies. For options granted in fiscal 2015, expected volatility was estimated using the implied volatility derived from options traded on former Parent's common stock. For options granted in fiscal 2014, expected volatility for options subject to service-based vesting was estimated using the implied volatility derived from options traded on former Parent's common stock, whereas for performance-contingent options, expected volatility was estimated using the historical volatility of former Parent's common stock. (3) The risk-free interest rate was estimated based on the yield on U.S. Treasury zero-coupon issues. (4) The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the option. (5) For options granted in fiscal 2016 subject to service-based vesting, the expected term was estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 110. For options granted in fiscal 2015 and 2014 subject to service-based vesting, the expected term was estimated using historical exercise and post-vesting termination patterns. For performance-contingent options, the expected term represents an output from the lattice model. |
Schedule of stock options activity | For fiscal 2016, the activity summarized in the table below is related to stock options held by Company employees under the Plan. For fiscal 2015 and 2014, the activity summarized in the table below is related to stock options held by Company employees under former Parent's Plan. Fiscal years ended October 31, 2016 2015 2014 Shares Weighted- Weighted- Aggregate Shares Weighted- Weighted- Aggregate Shares Weighted- Weighted- Aggregate In thousands In years In millions In thousands In years In millions In thousands In years In millions Outstanding — $ — 24,472 $ 27 37,433 $ 26 Converted from former Parent's plan 42,579 $ 15 — $ — — $ — Granted and assumed through acquisitions (1) 25,390 $ 15 3,147 $ 37 4,255 $ 28 Exercised (7,845 ) $ 11 (5,716 ) $ 18 (5,533 ) $ 18 Forfeited/cancelled/expired (2,626 ) $ 20 (7,116 ) $ 40 (11,683 ) $ 37 Employee transition (2) — $ — 11,391 $ 26 — $ — Outstanding 57,498 $ 15 5.4 $ 437 26,178 $ 26 5.2 $ 115 24,472 $ 27 4.2 $ 272 Vested and expected to 55,716 $ 15 5.3 $ 425 25,309 $ 26 5.2 $ 115 23,152 $ 27 4.0 $ 252 Exercisable at end of year 26,204 $ 13 3.8 $ 241 18,767 $ 23 4.7 $ 109 14,174 $ 31 2.5 $ 119 _______________________________________________________________________________ (1) Includes one-time stock option retention grant of approximately 16 million shares in fiscal 2016. (2) Employee transition amounts consist of option activity for employees transitioning between the Company and former Parent. |
Schedule of significant ranges of outstanding and exercisable stock options | The following table summarizes significant ranges of outstanding and exercisable stock options: As of October 31, 2016 Options Outstanding Options Exercisable Range of Exercise Prices Shares Weighted- Weighted- Shares Weighted- In thousands In years In thousands $0-$9.99 7,321 3.7 $ 8 8,905 $ 8 $10-$19.99 39,881 5.7 $ 15 13,289 $ 14 $20-$29.99 10,296 5.2 $ 21 4,010 $ 22 57,498 5.4 $ 15 26,204 $ 13 |
Taxes on Earnings (Tables)
Taxes on Earnings (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of domestic and foreign components of earnings before taxes | The domestic and foreign components of earnings before taxes were as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. $ (368 ) $ 192 $ 878 Non-U.S. 4,447 1,278 1,366 $ 4,079 $ 1,470 $ 2,244 |
Schedule of provision for (benefit from) taxes on earnings | The provision for (benefit from) taxes on earnings were as follows: For the fiscal years ended October 31, 2016 2015 2014 In millions U.S. federal taxes: Current $ 1,133 $ 1,647 $ 481 Deferred (1,162 ) (3,508 ) (460 ) Non-U.S. taxes: Current 1,085 492 375 Deferred 35 527 197 State taxes: Current 72 47 45 Deferred (245 ) (196 ) (42 ) $ 918 $ (991 ) $ 596 |
Schedule of differences between the U.S. federal statutory income tax rate and effective tax rate | The differences between the U.S. federal statutory income tax rate and the Company's effective tax rate were as follows: For the fiscal years ended October 31, 2016 2015 2014 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit (0.4 )% 14.1 % 2.4 % Lower rates in other jurisdictions, net (26.8 )% (53.6 )% (9.6 )% Valuation allowance (5.8 )% (75.7 )% 3.2 % Uncertain tax positions 23.7 % 5.8 % (0.7 )% Other, net (3.2 )% 7.0 % (3.7 )% 22.5 % (67.4 )% 26.6 % |
Schedule of reconciliation of gross unrecognized tax benefits | A reconciliation of unrecognized tax benefits is as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 4,901 $ 2,067 $ 1,925 Increases: For current year's tax positions 1,481 1,449 273 For prior years' tax positions 863 3,591 533 Net transfers from former Parent through equity 4,540 — — Decreases: For prior years' tax positions (115 ) (554 ) (328 ) Statute of limitations expiration (47 ) (12 ) (121 ) Settlements with taxing authorities (73 ) (54 ) (215 ) Net transfers to former Parent through equity — (1,586 ) — Balance at end of year $ 11,550 $ 4,901 $ 2,067 |
Schedule of significant components of deferred tax assets and deferred tax liabilities | The significant components of deferred tax assets and deferred tax liabilities were as follows: As of October 31, 2016 2015 Deferred Deferred Deferred Deferred In millions Loss and credit carryforwards $ 1,859 $ (26 ) $ 1,706 $ — Unremitted earnings of foreign subsidiaries — (3,708 ) — (3,362 ) Inventory valuation 94 (1 ) 97 (24 ) Intercompany transactions—royalty prepayments 5,237 — 5,598 — Intercompany transactions—excluding royalty prepayments 160 — 190 (14 ) Fixed assets 128 (128 ) 327 (362 ) Warranty 164 — 171 (2 ) Employee and retiree benefits 1,655 (65 ) 772 (48 ) Accounts receivable allowance 32 — 38 (9 ) Intangible assets 53 (176 ) — (349 ) Restructuring 258 — 210 — Deferred revenue 968 (3 ) 1,152 (196 ) Other 436 — 241 — Gross deferred tax assets and liabilities 11,044 (4,107 ) 10,502 (4,366 ) Valuation allowance (2,650 ) — (2,252 ) — Net deferred tax assets and liabilities $ 8,394 $ (4,107 ) $ 8,250 $ (4,366 ) |
Schedule of current and long-term deferred tax assets and liabilities | Deferred tax assets and liabilities included in the Consolidated Balance Sheets are as follows: As of October 31, 2016 2015 In millions Deferred tax assets $ 4,430 $ 3,925 Deferred tax liabilities (143 ) (41 ) Deferred tax assets net of deferred tax liabilities $ 4,287 $ 3,884 |
Schedule of tax credit carryforwards | As of October 31, 2016, Hewlett Packard Enterprise had recorded deferred tax assets for various tax credit carryforwards as follows: Carryforward Valuation Initial In millions U.S. foreign tax credits $ 291 $ — 2021 U.S. research and development and other credits 99 — 2019 Tax credits in state and foreign jurisdictions 205 (160 ) 2019 Balance at end of year $ 595 $ (160 ) |
Schedule of valuation allowance balance | The deferred tax asset valuation allowance and changes were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 2,252 $ 3,912 $ 3,194 Income tax expense (235 ) (1,155 ) 198 Other comprehensive income, currency translation and charges to other accounts 633 (505 ) 520 Balance at end of year $ 2,650 $ 2,252 $ 3,912 |
Balance Sheet Details (Table)
Balance Sheet Details (Table) | 12 Months Ended |
Oct. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net As of October 31, 2016 2015 In millions Unbilled receivable $ 1,086 $ 1,396 Accounts receivable 5,907 7,251 Allowance for doubtful accounts (84 ) (109 ) Total $ 6,909 $ 8,538 |
Schedule of revolving short-term financing arrangements | The allowance for doubtful accounts related to accounts receivable and changes therein were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 109 $ 126 $ 150 Provision for doubtful accounts 52 27 50 Deductions, net of recoveries (77 ) (44 ) (74 ) Balance at end of year $ 84 $ 109 $ 126 |
Schedule of transferred trade receivables not collected from the third parties | The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of period (1) $ 68 $ 188 $ 70 Trade receivables sold 3,015 4,221 3,947 Cash receipts (2,931 ) (4,327 ) (3,815 ) Foreign currency and other (7 ) (14 ) (14 ) Balance at end of period (1) $ 145 $ 68 $ 188 _______________________________________________________________________________ (1) Beginning and ending balances represent amounts for trade receivables sold but not yet collected. |
Inventory | Inventory As of October 31, 2016 2015 In millions Finished goods $ 1,202 $ 1,518 Purchased parts and fabricated assemblies 572 680 Total $ 1,774 $ 2,198 |
Other Current Assets | Other Current Assets As of October 31, 2016 2015 In millions Value-added taxes receivable $ 1,060 $ 1,538 Manufacturer and other receivables 1,057 1,992 Prepaid and other current assets 2,207 2,938 Total $ 4,324 $ 6,468 |
Property, Plant and Equipment | Property, Plant and Equipment As of October 31, 2016 2015 In millions Land $ 497 $ 514 Buildings and leasehold improvements 6,948 6,924 Machinery and equipment, including equipment held for lease 14,300 13,986 21,745 21,424 Accumulated depreciation (12,109 ) (11,538 ) Total $ 9,636 $ 9,886 |
Long-Term Financing Receivables and Other Assets | Long-Term Financing Receivables and Other Assets As of October 31, 2016 2015 In millions Financing receivables, net $ 3,938 $ 3,642 Deferred tax assets 4,430 3,925 Deferred costs - long-term 822 715 Other 4,026 2,593 Total $ 13,216 $ 10,875 |
Other Accrued Liabilities | Other Accrued Liabilities As of October 31, 2016 2015 In millions Accrued taxes - other $ 1,297 $ 1,364 Warranty 258 276 Sales and marketing programs 858 908 Other 2,578 3,766 Total $ 4,991 $ 6,314 |
Other Liabilities | Other Liabilities As of October 31, 2016 2015 In millions Pension, post-retirement, and post-employment liabilities $ 4,230 $ 3,432 Deferred revenue - long-term 3,408 3,565 Deferred tax liability 143 41 Tax liability - long-term 4,057 778 Other long-term liabilities 1,184 1,086 Total $ 13,022 $ 8,902 |
Financing Receivables and Ope36
Financing Receivables and Operating Leases (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Leases [Abstract] | |
Components of financing receivables | The components of financing receivables were as follows: As of October 31, 2016 2015 In millions Minimum lease payments receivable $ 7,293 $ 6,941 Unguaranteed residual value 231 217 Unearned income (574 ) (503 ) Financing receivables, gross 6,950 6,655 Allowance for doubtful accounts (89 ) (95 ) Financing receivables, net 6,861 6,560 Less: current portion (1) (2,923 ) (2,918 ) Amounts due after one year, net (1) $ 3,938 $ 3,642 _______________________________________________________________________________ (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 Consolidated Balance Sheets. |
Scheduled maturities of minimum lease payments receivable | As of October 31, 2016, scheduled maturities of the Company's minimum lease payments receivable were as follows: 2017 2018 2019 2020 2021 Thereafter Total In millions Scheduled maturities of minimum lease payments receivable $ 3,187 $ 1,952 $ 1,263 $ 595 $ 234 $ 62 $ 7,293 |
Credit risk profile of gross financing receivables | The credit risk profile of gross financing receivables, based on internal risk ratings, was as follows: As of October 31, 2016 2015 In millions Risk Rating: Low $ 3,484 $ 3,467 Moderate 3,382 3,115 High 84 73 Total $ 6,950 $ 6,655 |
Schedule of allowance for doubtful accounts for financing receivables | The allowance for doubtful accounts related to financing receivables and changes therein were as follows: As of October 31, 2016 2015 2014 In millions Balance at beginning of year $ 95 $ 111 $ 131 Provision for doubtful accounts 11 25 30 Deductions, net of recoveries (17 ) (41 ) (50 ) Balance at end of year $ 89 $ 95 $ 111 |
Gross financing receivables and related allowance collectively and individually evaluated for loss | The gross financing receivables and related allowance evaluated for loss were as follows: As of October 31, 2016 2015 In millions Gross financing receivables collectively evaluated for loss $ 6,667 $ 6,399 Gross financing receivables individually evaluated for loss 283 256 Total $ 6,950 $ 6,655 Allowance for financing receivables collectively evaluated for loss $ 73 $ 82 Allowance for financing receivables individually evaluated for loss 16 13 Total $ 89 $ 95 |
Summary of the aging and non-accrual status of gross financing receivables | The following table summarizes the aging and non-accrual status of gross financing receivables: As of October 31, 2016 2015 In millions Billed: (1) Current 1-30 days $ 337 $ 358 Past due 31-60 days 47 52 Past due 61-90 days 12 14 Past due >90 days 59 57 Unbilled sales-type and direct-financing lease receivables 6,495 6,174 Total gross financing receivables $ 6,950 $ 6,655 Gross financing receivables on non-accrual status (2) $ 163 $ 154 Gross financing receivables 90 days past due and still accruing interest (2) $ 120 $ 102 _______________________________________________________________________________ (1) Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables. (2) Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables. |
Schedule of operating lease assets included in machinery and equipment | Operating lease assets included in machinery and equipment in the Consolidated Balance Sheets were as follows: As of October 31, 2016 2015 In millions Equipment leased to customers $ 5,467 $ 4,428 Accumulated depreciation (2,134 ) (1,513 ) $ 3,333 $ 2,915 |
Minimum future rentals on non-cancelable operating leases | As of October 31, 2016, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows: 2017 2018 2019 2020 2021 Thereafter Total In millions Minimum future rentals on non-cancelable operating leases $ 1,505 $ 971 $ 460 $ 98 $ 17 $ 2 $ 3,053 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Business Combinations [Abstract] | |
Aggregate purchase price allocation, including preliminary allocations | The following table presents the aggregate purchase price allocation, including those items that were preliminary allocations, for the Company's acquisitions for the fiscal year ended October 31, 2015: In millions Goodwill $ 1,987 Amortizable intangible assets 704 In-process research and development 159 Net assets assumed 221 Total fair value of consideration $ 3,071 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of allocation and changes in the carrying amount of goodwill | Goodwill and related changes in the carrying amount by reportable segment were as follows: Enterprise Enterprise (1) Software Financial Total In millions Balance at October 31, 2014 (2) $ 16,867 $ 97 $ 8,852 $ 144 $ 25,960 Goodwill acquired during the period 1,891 — 96 — 1,987 Goodwill divested during the period (3) — — (123 ) — (123 ) Changes due to foreign currency (52 ) (5 ) — — (57 ) Goodwill adjustments (4) 6 — (512 ) — (506 ) Balance at October 31, 2015 (2) 18,712 92 8,313 144 27,261 Goodwill acquired during the period 2 — 10 — 12 Goodwill divested during the period (5) (3,000 ) (90 ) (234 ) — (3,324 ) Changes due to foreign currency (29 ) (2 ) — — (31 ) Goodwill adjustments (6) 260 — — — 260 Balance at October 31, 2016 (2) $ 15,945 $ — $ 8,089 $ 144 $ 24,178 _______________________________________________________________________________ (1) Goodwill related to the MphasiS Limited reporting unit, which was sold in the fourth quarter of 2016. (2) Goodwill is net of accumulated impairment losses of $13.7 billion , which were recorded prior to October 31, 2014. Of that amount, $8.0 billion relates to the Enterprise Services segment and the remaining $5.7 billion relates to the Software segment. (3) Goodwill divested as part of the divestiture of the LiveVault and iManage businesses. (4) In connection with the Separation, former Parent retained the marketing optimization software product group, a continuing business which had historically been managed by the Company and included in the Software segment. The adjustment reflects the impact of removing the related goodwill of $512 million , allocated on a relative fair value basis, from former Parent. (5) Goodwill divested as part of the H3C transaction (EG), sale of TippingPoint (Software) and sale of MphasiS (ES). (6) Primarily measurement period adjustments to provisional tax items recorded in conjunction with the Aruba acquisition. |
Intangible Assets | Intangible assets are comprised of: As of October 31, 2016 As of October 31, 2015 Gross Accumulated Accumulated Net Gross Accumulated Accumulated Net In millions Customer contracts, customer lists and distribution agreements $ 1,394 $ (322 ) $ (856 ) $ 216 $ 5,109 $ (3,517 ) $ (856 ) $ 736 Developed and core technology and patents 4,190 (1,232 ) (2,138 ) 820 4,218 (1,110 ) (2,138 ) 970 Trade name and trade marks 178 (21 ) (109 ) 48 231 (57 ) (109 ) 65 In-process research and development — — — — 159 — — 159 Total intangible assets $ 5,762 $ (1,575 ) $ (3,103 ) $ 1,084 $ 9,717 $ (4,684 ) $ (3,103 ) $ 1,930 |
Schedule of intangible assets | As of October 31, 2016 , the weighted-average remaining useful lives of the Company's finite-lived intangible assets were as follows: Finite-Lived Intangible Assets Weighted-Average In years Customer contracts, customer lists and distribution agreements 5 Developed and core technology and patents 5 Trade name and trade marks 7 |
Schedule of estimated future amortization expense related to finite-lived purchased intangible assets | As of October 31, 2016 , estimated future amortization expense related to finite-lived intangible assets was as follows: Fiscal year In millions 2017 $ 339 2018 248 2019 202 2020 172 2021 55 Thereafter 68 Total $ 1,084 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis: As of October 31, 2016 As of October 31, 2015 Fair Value Fair Value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets Cash Equivalents and Investments: Time deposits $ — $ 4,085 $ — $ 4,085 $ — $ 2,473 $ — $ 2,473 Money market funds 6,549 — — 6,549 4,592 — — 4,592 Mutual funds — — — — — 246 — 246 Equity securities in public companies 17 — — 17 46 7 — 53 Foreign bonds 8 279 — 287 8 305 — 313 Other debt securities — — 35 35 — — 40 40 Derivative Instruments: Interest rate contracts — 109 — 109 — — — — Foreign exchange contracts — 660 — 660 — 816 — 816 Other derivatives — — — — — 3 — 3 Total assets $ 6,574 $ 5,133 $ 35 $ 11,742 $ 4,646 $ 3,850 $ 40 $ 8,536 Liabilities Derivative Instruments: Interest rate contracts $ — $ 6 $ — $ 6 $ — $ 55 $ — $ 55 Foreign exchange contracts — 220 — 220 — 137 — 137 Other derivatives — 2 — 2 — — — — Total liabilities $ — $ 228 $ — $ 228 $ — $ 192 $ — $ 192 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Investments, All Other Investments [Abstract] | |
Schedule of cash equivalents and available-for-sale investments | Cash equivalents and available-for-sale investments were as follows: As of As of Cost Gross Gross Fair Cost Gross Gross Fair In millions Cash Equivalents: Time deposits $ 4,074 $ — $ — $ 4,074 $ 2,367 $ — $ — $ 2,367 Money market funds 6,549 — — 6,549 4,592 — — 4,592 Mutual funds — — — — 173 — — 173 Total cash equivalents 10,623 — — 10,623 7,132 — — 7,132 Available-for-Sale Investments: Debt securities: Time deposits 11 — — 11 106 — — 106 Foreign bonds 218 69 — 287 244 69 — 313 Other debt securities 47 — (12 ) 35 53 — (13 ) 40 Total debt securities 276 69 (12 ) 333 403 69 (13 ) 459 Equity securities: Mutual funds — — — — 73 — — 73 Equity securities in public companies 21 — (4 ) 17 55 7 (9 ) 53 Total equity securities 21 — (4 ) 17 128 7 (9 ) 126 Total available-for-sale investments 297 69 (16 ) 350 531 76 (22 ) 585 Total cash equivalents and available-for-sale investments $ 10,920 $ 69 $ (16 ) $ 10,973 $ 7,663 $ 76 $ (22 ) $ 7,717 |
Schedule of contractual maturities of investments in available-for-sale debt securities | Contractual maturities of investments in available-for-sale debt securities were as follows: As of Amortized Fair Value In millions Due in more than five years $ 276 $ 333 $ 276 $ 333 |
Schedule of gross notional and fair value of derivative instruments in the Combined and Consolidated Balance Sheets | The gross notional and fair value of derivative instruments in the Consolidated Balance Sheets was as follows: As of As of Fair Value Fair Value Outstanding Other Long-Term Other Long-Term Outstanding Other Long-Term Other Long-Term In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 9,500 $ — $ 109 $ — $ 6 $ 9,500 $ — $ — $ — $ 55 Cash flow hedges: Foreign currency contracts 7,255 296 172 40 15 8,692 296 206 28 8 Net investment hedges: Foreign currency contracts 1,891 53 28 23 28 1,861 114 66 7 4 Total derivatives designated as hedging instruments 18,646 349 309 63 49 20,053 410 272 35 67 Derivatives not designated as hedging instruments Foreign currency contracts 16,496 100 11 103 11 9,283 46 88 50 40 Other derivatives 158 — — 2 — 127 3 — — — Total derivatives not designated as hedging instruments 16,654 100 11 105 11 9,410 49 88 50 40 Total derivatives $ 35,300 $ 449 $ 320 $ 168 $ 60 $ 29,463 $ 459 $ 360 $ 85 $ 107 |
Schedule of information related to the potential effect of entity's master netting agreements and collateral security agreements | As of October 31, 2016 and 2015 , information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements was as follows: As of In the Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Gross Gross Net Amount Derivatives Financial Net Amount In millions Derivative assets $ 769 $ 769 $ 214 $ 465 (1) $ 90 Derivative liabilities $ 228 $ 228 $ 214 $ 10 (2) $ 4 As of In the Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Gross Gross Net Amount Derivatives Financial Net Amount In millions Derivative assets $ 819 $ — $ 819 $ 153 $ 631 (1) $ 35 Derivative liabilities $ 192 $ — $ 192 $ 153 $ 19 (2) $ 20 _______________________________________________________________________________ (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 through re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. |
Schedule of pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship | The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Recognized in Income on Derivative and Related Hedged Item Derivative Instrument Location 2016 2015 2014 Hedged Item Location 2016 2015 2014 In millions In millions Interest rate contracts Interest and other, net $ 158 $ (55 ) $ — Fixed-rate debt Interest and other, net $ (158 ) $ 55 $ — |
Schedule of pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Gains (Losses) Reclassified from Accumulated OCI 2016 2015 2014 Location 2016 2015 2014 In millions In millions Cash flow hedges: Foreign currency contracts $ (16 ) $ 279 $ 149 Net revenue $ 19 $ 276 $ (4 ) Foreign currency contracts 6 (3 ) 13 Cost of products — 6 3 Foreign currency contracts — (2 ) 9 Other operating expenses — (4 ) (9 ) Foreign currency contracts — — — Gain on MphasiS divestiture 8 — — Foreign currency contracts 236 207 (60 ) Interest and other, net 243 202 (50 ) Total currency hedges $ 226 $ 481 $ 111 $ 270 $ 480 $ (60 ) Net investment hedges: Foreign currency contracts $ (58 ) $ 228 $ 57 Interest and other, net $ — $ — $ — |
Schedule of pre-tax effect of derivative instruments not designated as hedging instruments on the Combined and Consolidated Statements of Earnings | The pre-tax effect of derivative instruments not designated as hedging instruments on the Consolidated and Combined Statements of Earnings for the fiscal years ended October 31, 2016 , 2015 and 2014 was as follows: Gains (Losses) Recognized in Income on Derivatives Location 2016 2015 2014 In millions Foreign currency contracts Interest and other, net $ (425 ) $ 11 $ 169 Other derivatives Interest and other, net (5 ) 1 — Total $ (430 ) $ 12 $ 169 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable and short-term borrowings, including the current portion of long-term debt | Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows: As of October 31, 2016 2015 Amount Weighted-Average Amount Weighted-Average Dollars in millions Current portion of long-term debt $ 2,776 1.7 % $ 161 2.6 % FS Commercial paper 326 0.1 % 39 0.2 % Notes payable to banks, lines of credit and other (1) 430 2.0 % 491 2.7 % Total notes payable and short-term borrowings $ 3,532 $ 691 _______________________________________________________________________________ (1) Notes payable to banks, lines of credit and other includes $381 million and $374 million at October 31, 2016 and 2015 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries. |
Schedule of long-term debt | Long-Term Debt As of October 31, 2016 2015 In millions Hewlett Packard Enterprise Senior Notes (1) $2,250 issued at discount to par at a price of 99.944% in October 2015 at 2.45%, due October 5, 2017, interest payable semi-annually on April 5 and October 5 of each year $ 2,249 $ 2,249 $2,650 issued at discount to par at a price of 99.872% in October 2015 at 2.85%, due October 5, 2018, interest payable semi-annually on April 5 and October 5 of each year 2,648 2,647 $3,000 issued at discount to par at a price of 99.972% in October 2015 at 3.6%, due October 15, 2020, interest payable semi-annually on April 15 and October 15 of each year 2,999 2,999 $1,350 issued at discount to par at a price of 99.802% in October 2015 at 4.4%, due October 15, 2022, interest payable semi-annually on April 15 and October 15 of each year 1,348 1,347 $2,500 issued at discount to par at a price of 99.725% in October 2015 at 4.9%, due October 15, 2025, interest payable semi-annually on April 15 and October 15 of each year 2,494 2,493 $750 issued at discount to par at a price of 99.942% in October 2015 at 6.2%, due October 15, 2035, interest payable semi-annually on April 15 and October 15 of each year 750 749 $1,500 issued at discount to par at a price of 99.932% in October 2015 at 6.35%, due October 15, 2045, interest payable semi-annually on April 15 and October 15 of each year 1,499 1,499 $350 issued at par in October 2015 at three-month USD LIBOR plus 1.74%, due October 5, 2017, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year 350 350 $250 issued at par in October 2015 at three-month USD LIBOR plus 1.93%, due October 5, 2018, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year 250 250 EDS Senior Notes (1) $300 issued October 1999 at 7.45%, due October 2029 312 313 Other, including capital lease obligations, at 0.00%-7.45%, due in calendar years 2016-2022 (2) 382 423 Fair value adjustment related to hedged debt 103 (55 ) Less: current portion (2,776 ) (161 ) Total long-term debt $ 12,608 $ 15,103 _______________________________________________________________________________ (1) The Company may redeem some or all of the fixed-rate Hewlett Packard Enterprise Senior Notes and the EDS Senior Notes at any time in accordance with the terms thereof. (2) Other, including capital lease obligations includes $181 million and $196 million as of October 31, 2016 and 2015 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries that are collateralized by receivables and underlying assets associated with the related capital and operating leases. For both the periods presented, the carrying amount of the assets approximated the carrying amount of the borrowings. |
Schedule of interest expense on borrowings recognized in the Combined and Consolidated Statements of Earnings | Interest expense on borrowings recognized in the Consolidated and Combined Statements of Earnings was as follows: Fiscal years ended October 31, Expense Location 2016 2015 2014 In millions Financing interest Financing interest $ 249 $ 240 $ 277 Interest expense Interest and other, net 328 29 45 Total interest expense $ 577 $ 269 $ 322 |
Schedule of borrowing resources available to obtain short-term or long-term financing | The Company had the following resources available to obtain short- or long-term financing if additional liquidity is needed: As of In millions Commercial paper programs $ 4,174 Uncommitted lines of credit $ 1,884 |
Schedule of aggregate future maturities of long-term debt at face value | As of October 31, 2016 , aggregate future maturities of the Company's long-term debt at face value (excluding a fair value adjustment related to hedged debt of $103 million and a net discount on debt issuance of $1 million ), including capital lease obligations were as follows: Fiscal year In millions 2017 $ 2,777 2018 2,948 2019 40 2020 3,002 2021 57 Thereafter 6,458 Total $ 15,282 |
Related Party Transactions an42
Related Party Transactions and Former Parent Company Investment (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of net transfers from (to) Parent, intercompany receivable and payable | Receivable from and Payable (to) former Parent As of In millions Receivable from former Parent (1) $ 492 Payable to former Parent (2) (343 ) Net receivable from former Parent $ 149 ______________________________________________________________________________ (1) The Company includes the receivable from former Parent in Other current assets in the accompanying Consolidated Balance Sheets. (2) The Company includes the employee compensation and benefits portion in Employee compensation and benefits, and all other accruals from former Parent in Other accrued liabilities in the accompanying Consolidated Balance Sheets. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of tax effects related to changes in Other Comprehensive (Loss) Income | Taxes related to Other Comprehensive Loss Fiscal years ended October 31, 2016 2015 2014 In millions Taxes on change in net unrealized (losses) gains on available-for-sale securities: Tax benefit (provision) on net unrealized (losses) gains arising during the period $ 2 $ 2 $ (1 ) Tax benefit on losses reclassified into earnings (2 ) — — — 2 (1 ) Taxes on change in net unrealized (losses) gains on cash flow hedges: Tax provision on net unrealized gains arising during the period (14 ) (69 ) (32 ) Tax provision on net (gains) losses reclassified into earnings 25 76 1 11 7 (31 ) Taxes on change in unrealized components of defined benefit plans: Tax benefit on losses arising during the period 63 30 58 Tax benefit on amortization of actuarial loss and prior service benefit (20 ) (10 ) (6 ) Tax provision on curtailments, settlements and other (1 ) — (3 ) Tax benefit on Plans transferred from former Parent during the period — 255 — 42 275 49 Taxes on change in cumulative translation adjustment: Tax on cumulative translation adjustment arising during the period 20 (73 ) (27 ) Tax on release of cumulative translation adjustment as a result of H3C and MphasiS divestitures (22 ) — — (2 ) (73 ) (27 ) Tax benefit (provision) on other comprehensive loss $ 51 $ 211 $ (10 ) |
Schedule of changes and reclassifications related to items of Other Comprehensive (Loss) Income, net of taxes | Changes and reclassifications related to Other Comprehensive Loss, net of taxes Fiscal years ended October 31, 2016 2015 2014 In millions Other comprehensive loss, net of taxes: Change in net unrealized (losses) gains on available-for-sale securities: Net unrealized (losses) gains arising during the period $ (2 ) $ (8 ) $ 4 Losses (gains) reclassified into earnings 1 — (1 ) (1 ) (8 ) 3 Change in net unrealized (losses) gains on cash flow hedges: Net unrealized gains arising during the period 212 412 79 Net (gains) losses reclassified into earnings (1) (245 ) (404 ) 61 (33 ) 8 140 Change in unrealized components of defined benefit plans: Losses arising during the period (1,714 ) (352 ) (736 ) Amortization of actuarial loss and prior service benefit (2) 264 204 76 Curtailments, settlements and other (19 ) 4 15 Plans transferred from former Parent during the period — (2,352 ) — Merged into former Parent's Shared plan during the period — — 61 (1,469 ) (2,496 ) (584 ) Change in cumulative translation adjustment: Cumulative translation adjustment arising during the period (134 ) (271 ) (112 ) Release of cumulative translation adjustment as a result of H3C and MphasiS divestitures 53 — — (81 ) (271 ) (112 ) Other comprehensive loss, net of taxes $ (1,584 ) $ (2,767 ) $ (553 ) _______________________________________________________________________________ (1) Reclassification of pre-tax (gains) losses on cash flow hedges into the Consolidated and Combined Statements of Earnings was as follows: 2016 2015 2014 In millions Net revenue $ (19 ) $ (276 ) $ 4 Cost of products — (6 ) (3 ) Other operating expenses — 4 9 Gain on MphasiS divestiture (8 ) — — Interest and other, net (243 ) (202 ) 50 $ (270 ) $ (480 ) $ 60 (2) These components are included in the computation of net pension and post-retirement benefit (credit) cost in Note 4, "Retirement and Post-Retirement Benefit Plans". |
Schedule of reclassifications of pre tax losses (gains) on cash flow hedges into the Combined and Consolidated Statements of Earnings | (1) Reclassification of pre-tax (gains) losses on cash flow hedges into the Consolidated and Combined Statements of Earnings was as follows: 2016 2015 2014 In millions Net revenue $ (19 ) $ (276 ) $ 4 Cost of products — (6 ) (3 ) Other operating expenses — 4 9 Gain on MphasiS divestiture (8 ) — — Interest and other, net (243 ) (202 ) 50 $ (270 ) $ (480 ) $ 60 (2) These components are included in the computation of net pension and post-retirement benefit (credit) cost in Note 4, "Retirement and Post-Retirement Benefit Plans". |
Schedule of Accumulated Other Comprehensive loss, net of taxes | The components of accumulated other comprehensive loss, net of taxes as of October 31, 2016 and changes during fiscal 2016 were as follows: Net unrealized Net unrealized Unrealized Cumulative Accumulated In millions Balance at beginning of period $ 55 $ 68 $ (4,173 ) $ (965 ) $ (5,015 ) Other comprehensive (loss) income before reclassifications (2 ) 212 (1,733 ) (134 ) (1,657 ) Reclassifications of (gains) losses into earnings 1 (245 ) 264 53 73 Balance at end of period $ 54 $ 35 $ (5,642 ) $ (1,046 ) $ (6,599 ) |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Earnings Per Share [Abstract] | |
Basic and diluted net Earnings Per Share calculations | The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows: Fiscal years ended October 31, 2016 2015 2014 In millions, except per share amounts Numerator: Net earnings $ 3,161 $ 2,461 $ 1,648 Denominator: (1)(2) Weighted-average shares used to compute basic net EPS 1,715 1,804 1,804 Dilutive effect of employee stock plans (3) 24 30 30 Weighted-average shares used to compute diluted net EPS 1,739 1,834 1,834 Net earnings per share: Basic $ 1.84 $ 1.36 $ 0.91 Diluted $ 1.82 $ 1.34 $ 0.90 Anti-dilutive weighted-average stock awards (4) 32 28 28 _______________________________________________________________________________ (1) The Company considers restricted stock awards that provide the holder with a non-forfeitable right to receive dividends to be participating securities. As of October 31, 2016 and 2015, there were no shares outstanding of restricted stock that provided the holder with a non-forfeitable right to receive dividends. For fiscal 2014, net earnings allocated to participating securities were not significant. (2) On November 1, 2015, the Separation and distribution date, HP Inc. stockholders received one share of Hewlett Packard Enterprise common stock for every share of HP Inc. common stock held as of the record date, October 21, 2015. For comparative purposes, the same number of shares used to compute basic and diluted net earnings per share for the fiscal year ended October 31, 2015 is used in the calculation of basic and diluted net earnings per share for fiscal 2015 and 2014. (3) For fiscal 2015 and 2014, the Company calculated the weighted-average dilutive effect of employee stock plans after conversion by multiplying the dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015. (4) The Company excludes stock awards where the assumed proceeds exceed the average market price from the calculation of diluted net EPS, because their effect would be anti-dilutive. The assumed proceeds of a stock award include the sum of its exercise price (if the award is an option), average unrecognized compensation cost and excess tax benefit. For the fiscal years ended October 31, 2015 and 2014, the Company's anti-dilutive shares were calculated by multiplying the anti-dilutive Hewlett-Packard Company stock-based awards attributable to Hewlett Packard Enterprise employees for the fiscal year ended October 31, 2015 by the price conversion ratio used to convert those awards to equivalent units of Hewlett Packard Enterprise awards on the Separation date. The price conversion ratio was calculated using the closing price of Hewlett-Packard Company common shares on October 31, 2015 divided by the opening price of Hewlett Packard Enterprise common shares on November 2, 2015. |
Guarantees, Indemnifications 45
Guarantees, Indemnifications and Warranties (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Guarantees [Abstract] | |
Changes in aggregate product warranty liabilities and changes | The Company's aggregate product warranty liabilities and changes therein were as follows: Fiscal years ended 2016 2015 In millions Balance at beginning of year $ 523 $ 571 Accruals for warranties issued 376 373 Adjustments related to pre-existing warranties (including changes in estimates) 1 (16 ) Divested as part of the H3C transaction (23 ) — Settlements made (in cash or in kind) (380 ) (405 ) Balance at end of year $ 497 $ 523 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future annual lease commitments and sublease rental income | As of October 31, 2016 , future minimum lease commitments on the Company's operating leases were as follows: Fiscal Year In millions 2017 $ 557 2018 464 2019 333 2020 257 2021 185 Thereafter 594 Less: Sublease rental income (169 ) Total $ 2,221 |
Future unconditional purchase obligations | As of October 31, 2016 , future unconditional purchase obligations were as follows: Fiscal Year In millions 2017 $ 537 2018 529 2019 419 2020 175 2021 122 Thereafter 16 Total $ 1,798 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 12 Months Ended |
Oct. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The difference between the sale date carrying value of the Company's investment in H3C and its proportionate share of the net assets of H3C, which is the basis difference is summarized as follows: In millions Carrying value of investment in H3C $ 2,739 Proportionate share of net assets of H3C 205 Basis difference $ 2,534 The basis difference was allocated as follows: In millions Equity method goodwill $ 1,674 Intangible assets 749 In-process research and development 188 Deferred tax liabilities (152 ) Other 75 Basis difference $ 2,534 |
Overview and Summary of Signi48
Overview and Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Nov. 01, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 |
Segment Reporting Information | ||||
Outstanding shares of company distributed to shareholders of former parent | 100.00% | |||
Separation related adjustments | $ 1,200 | |||
Advertising cost | $ 340 | $ 224 | $ 220 | |
HP Inc. | ||||
Segment Reporting Information | ||||
Shares distributed (shares) | 1 | |||
Shares distributed to shareholder (shares) | 1,800,000,000 |
Overview and Summary of Signi49
Overview and Summary of Significant Accounting Policies (Details 2) - Three largest outsourced manufacturer - Major Customers - Accounts Receivable $ in Millions | 12 Months Ended | |
Oct. 31, 2016USD ($)item | Oct. 31, 2015USD ($) | |
Concentration Risk | ||
Number of largest distributor and reseller receivable balances or largest outsourced manufacturer receivable balances | item | 3 | |
Concentration of credit risk (as a percent) | 83.00% | 80.00% |
Manufacturer receivables | $ | $ 382 | $ 414 |
Overview and Summary of Signi50
Overview and Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Oct. 31, 2016 | |
Minimum | Intangible Assets | |
Property, Plant and Equipment, Net | |
Estimated useful life for purchased intangible assets | 1 year |
Maximum | Intangible Assets | |
Property, Plant and Equipment, Net | |
Estimated useful life for purchased intangible assets | 10 years |
Buildings and improvements | Minimum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 5 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 40 years |
Machinery and equipment, including equipment held for lease | Minimum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 3 years |
Machinery and equipment, including equipment held for lease | Maximum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 15 years |
Capitalized internal use software | Minimum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 3 years |
Capitalized internal use software | Maximum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 5 years |
Capitalized software for resale | Maximum | |
Property, Plant and Equipment, Net | |
Estimated useful life for property, plant and equipment | 3 years |
Overview and Summary of Signi51
Overview and Summary of Significant Accounting Policies - table (Details) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other current assets | $ 4,324 | $ 6,468 |
Long-term financing receivables and other assets | 13,216 | 10,875 |
Taxes on earnings | $ (420) | (476) |
Other liabilities | (8,902) | |
Historical Accounting Method | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other current assets | 7,677 | |
Long-term financing receivables and other assets | 11,020 | |
Taxes on earnings | (634) | |
Other liabilities | (10,098) | |
Accounting Standards Update 2015-17 | Effect of Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other current assets | (1,209) | |
Long-term financing receivables and other assets | (145) | |
Taxes on earnings | 158 | |
Other liabilities | $ 1,196 |
Segment Information (Detail)
Segment Information (Detail) $ in Billions | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2016 | Oct. 31, 2016USD ($)segment | Oct. 31, 2015USD ($) | May 31, 2016 | |
Segment Reporting Information | ||||
Number of reportable segments | segment | 5 | |||
Advance royalty proceeds received from intercompany advanced royalty payments and licensing arrangements | $ | $ 3.7 | $ 5 | ||
Royalty recognition term | 5 years | |||
Entity ownership of existing businesses percentage | 49.00% | |||
Unisplendour | H3C | ||||
Segment Reporting Information | ||||
Ownership | 51.00% |
Segment Information - Operating
Segment Information - Operating Results (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Segment Reporting Information | |||
Net revenue | $ 50,123 | $ 52,107 | $ 55,123 |
Earnings (loss) from operations | 4,150 | 1,523 | 2,335 |
Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 26,017 | 26,668 | 26,812 |
Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 18,094 | 19,010 | 21,297 |
Software | |||
Segment Reporting Information | |||
Net revenue | 2,912 | 3,308 | 3,609 |
Financial Services | |||
Segment Reporting Information | |||
Net revenue | 3,097 | 3,114 | 3,401 |
Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 3 | 7 | 4 |
Intersegment Eliminations | |||
Segment Reporting Information | |||
Net revenue | 2,356 | 2,451 | 2,437 |
Intersegment Eliminations | Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 1,202 | 1,239 | 915 |
Intersegment Eliminations | Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 778 | 796 | 1,101 |
Intersegment Eliminations | Software | |||
Segment Reporting Information | |||
Net revenue | 283 | 314 | 324 |
Intersegment Eliminations | Financial Services | |||
Segment Reporting Information | |||
Net revenue | 93 | 102 | 97 |
Intersegment Eliminations | Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 0 | 0 | 0 |
Operating segments | |||
Segment Reporting Information | |||
Net revenue | 52,479 | 54,558 | 57,560 |
Earnings (loss) from operations | 5,653 | 5,595 | 5,742 |
Operating segments | Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 27,219 | 27,907 | 27,727 |
Earnings (loss) from operations | 3,459 | 3,862 | 3,909 |
Operating segments | Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 18,872 | 19,806 | 22,398 |
Earnings (loss) from operations | 1,457 | 1,019 | 818 |
Operating segments | Software | |||
Segment Reporting Information | |||
Net revenue | 3,195 | 3,622 | 3,933 |
Earnings (loss) from operations | 749 | 788 | 871 |
Operating segments | Financial Services | |||
Segment Reporting Information | |||
Net revenue | 3,190 | 3,216 | 3,498 |
Earnings (loss) from operations | 336 | 349 | 389 |
Operating segments | Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 3 | 7 | 4 |
Earnings (loss) from operations | $ (348) | $ (423) | $ (245) |
Segment Information (Detail 2)
Segment Information (Detail 2) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Segment Reporting Information | |||
Net revenue | $ 50,123 | $ 52,107 | $ 55,123 |
Earnings (loss) from operations | 4,150 | 1,523 | 2,335 |
Stock-based compensation expense | (597) | (565) | (427) |
Amortization of intangible assets | (755) | (852) | (906) |
Restructuring charges | (1,236) | (954) | (1,471) |
Acquisition and other related charges | (178) | (89) | (11) |
Separation costs | (598) | (797) | 0 |
Defined benefit plan settlement charges | 0 | (225) | 0 |
Impairment of data center assets | 0 | (136) | 0 |
Gain on H3C and MphasiS divestitures | 2,420 | 0 | 0 |
Interest and other, net | (312) | (51) | (91) |
Tax indemnification adjustments | 317 | 0 | 0 |
Loss from equity interests | (76) | (2) | 0 |
Total Hewlett Packard Enterprise consolidated and combined earnings before taxes | 4,079 | 1,470 | 2,244 |
Assets | 79,679 | 79,916 | |
Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 26,017 | 26,668 | 26,812 |
Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 18,094 | 19,010 | 21,297 |
Software | |||
Segment Reporting Information | |||
Net revenue | 2,912 | 3,308 | 3,609 |
Financial Services | |||
Segment Reporting Information | |||
Net revenue | 3,097 | 3,114 | 3,401 |
Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 3 | 7 | 4 |
Operating segments | |||
Segment Reporting Information | |||
Net revenue | 52,479 | 54,558 | 57,560 |
Earnings (loss) from operations | 5,653 | 5,595 | 5,742 |
Operating segments | Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 27,219 | 27,907 | 27,727 |
Earnings (loss) from operations | 3,459 | 3,862 | 3,909 |
Assets | 26,163 | 27,987 | |
Operating segments | Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 18,872 | 19,806 | 22,398 |
Earnings (loss) from operations | 1,457 | 1,019 | 818 |
Assets | 9,563 | 11,581 | |
Operating segments | Software | |||
Segment Reporting Information | |||
Net revenue | 3,195 | 3,622 | 3,933 |
Earnings (loss) from operations | 749 | 788 | 871 |
Assets | 9,425 | 9,996 | |
Operating segments | Financial Services | |||
Segment Reporting Information | |||
Net revenue | 3,190 | 3,216 | 3,498 |
Earnings (loss) from operations | 336 | 349 | 389 |
Assets | 13,594 | 13,163 | |
Operating segments | Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 3 | 7 | 4 |
Earnings (loss) from operations | (348) | (423) | (245) |
Assets | 161 | 83 | |
Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | 2,356 | 2,451 | 2,437 |
Eliminations of inter-segment net revenue and other | Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | 1,202 | 1,239 | 915 |
Eliminations of inter-segment net revenue and other | Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | 778 | 796 | 1,101 |
Eliminations of inter-segment net revenue and other | Software | |||
Segment Reporting Information | |||
Net revenue | 283 | 314 | 324 |
Eliminations of inter-segment net revenue and other | Financial Services | |||
Segment Reporting Information | |||
Net revenue | 93 | 102 | 97 |
Eliminations of inter-segment net revenue and other | Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | 0 | 0 | 0 |
Significant Reconciling Items | |||
Segment Reporting Information | |||
Corporate and unallocated costs and eliminations | (598) | (454) | (592) |
Stock-based compensation expense | (558) | (565) | (427) |
Amortization of intangible assets | (755) | (852) | (906) |
Restructuring charges | (1,236) | (954) | (1,471) |
Acquisition and other related charges | (178) | (89) | (11) |
Separation costs | (598) | (797) | 0 |
Defined benefit plan settlement charges | 0 | (225) | 0 |
Impairment of data center assets | 0 | (136) | 0 |
Gain on H3C and MphasiS divestitures | 2,420 | 0 | 0 |
Interest and other, net | (312) | (51) | (91) |
Tax indemnification adjustments | 317 | 0 | $ 0 |
Loss from equity interests | (76) | (2) | |
Corporate and unallocated assets | |||
Segment Reporting Information | |||
Assets | $ 20,773 | $ 17,106 |
Segment Information (Detail 3)
Segment Information (Detail 3) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Segment Reporting Information | |||
Net revenue | $ 50,123 | $ 52,107 | $ 55,123 |
Net property, plant and equipment: | |||
Property, plant and equipment | 9,636 | 9,886 | |
U.S. | |||
Segment Reporting Information | |||
Net revenue | 19,581 | 20,063 | 20,833 |
Net property, plant and equipment: | |||
Property, plant and equipment | 4,768 | 4,851 | |
United Kingdom | |||
Segment Reporting Information | |||
Net revenue | 5,074 | 5,379 | 5,661 |
Net property, plant and equipment: | |||
Property, plant and equipment | 912 | 955 | |
Other countries | |||
Segment Reporting Information | |||
Net revenue | 25,468 | 26,665 | $ 28,629 |
Net property, plant and equipment: | |||
Property, plant and equipment | $ 3,956 | $ 4,080 |
Segment Information (Details 4)
Segment Information (Details 4) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Segment Reporting Information | |||
Net revenue | $ (50,123) | $ (52,107) | $ (55,123) |
Operating segments | |||
Segment Reporting Information | |||
Net revenue | (52,479) | (54,558) | (57,560) |
Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | (2,356) | (2,451) | (2,437) |
Enterprise Group | |||
Segment Reporting Information | |||
Net revenue | (26,017) | (26,668) | (26,812) |
Enterprise Group | Operating segments | |||
Segment Reporting Information | |||
Net revenue | (27,219) | (27,907) | (27,727) |
Enterprise Group | Operating segments | Servers | |||
Segment Reporting Information | |||
Net revenue | (14,019) | (14,219) | (13,401) |
Enterprise Group | Operating segments | Technology Services | |||
Segment Reporting Information | |||
Net revenue | (7,160) | (7,662) | (8,383) |
Enterprise Group | Operating segments | Storage | |||
Segment Reporting Information | |||
Net revenue | (3,065) | (3,180) | (3,315) |
Enterprise Group | Operating segments | Networking | |||
Segment Reporting Information | |||
Net revenue | (2,975) | (2,846) | (2,628) |
Enterprise Group | Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | (1,202) | (1,239) | (915) |
Enterprise Services | |||
Segment Reporting Information | |||
Net revenue | (18,094) | (19,010) | (21,297) |
Enterprise Services | Operating segments | |||
Segment Reporting Information | |||
Net revenue | (18,872) | (19,806) | (22,398) |
Enterprise Services | Operating segments | Infrastructure Technology Outsourcing | |||
Segment Reporting Information | |||
Net revenue | (11,425) | (12,107) | (14,038) |
Enterprise Services | Operating segments | Application and Business Services | |||
Segment Reporting Information | |||
Net revenue | (7,447) | (7,699) | (8,360) |
Enterprise Services | Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | (778) | (796) | (1,101) |
Software | |||
Segment Reporting Information | |||
Net revenue | (2,912) | (3,308) | (3,609) |
Software | Operating segments | |||
Segment Reporting Information | |||
Net revenue | (3,195) | (3,622) | (3,933) |
Software | Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | (283) | (314) | (324) |
Financial Services | |||
Segment Reporting Information | |||
Net revenue | (3,097) | (3,114) | (3,401) |
Financial Services | Operating segments | |||
Segment Reporting Information | |||
Net revenue | (3,190) | (3,216) | (3,498) |
Financial Services | Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | (93) | (102) | (97) |
Corporate Investments | |||
Segment Reporting Information | |||
Net revenue | (3) | (7) | (4) |
Corporate Investments | Operating segments | |||
Segment Reporting Information | |||
Net revenue | (3) | (7) | (4) |
Corporate Investments | Eliminations of inter-segment net revenue and other | |||
Segment Reporting Information | |||
Net revenue | $ 0 | $ 0 | $ 0 |
Restructuring (Details)
Restructuring (Details) item in Thousands, $ in Millions | Sep. 14, 2015item | Oct. 31, 2016USD ($) | Oct. 31, 2015USD ($)position | Oct. 31, 2014USD ($) |
Restructuring Reserve | ||||
Restructuring charges | $ 1,236 | $ 954 | $ 1,471 | |
Short-term portion of restructuring reserve, recorded in Accrued restructuring | 671 | 628 | 711 | |
Long-term portion of restructuring reserve, recorded in Other liabilities | 166 | 114 | 178 | |
Allocated restructuring charges | ||||
Restructuring Reserve | ||||
Restructuring charges | 131 | |||
Restructuring Plan All | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 742 | 889 | 878 | |
Restructuring charges | 1,236 | 954 | 1,340 | |
Cash Payments | (1,043) | (1,021) | (1,239) | |
Non-cash items | (98) | (80) | (90) | |
Balance at the end of the period | 837 | 742 | 889 | |
Total costs incurred to date as of October 31, 2016 | 9,151 | |||
Total expected costs to be incurred as of October 31, 2016 | 10,259 | |||
Fiscal 2015 Plan | ||||
Restructuring Reserve | ||||
Total expected costs to be incurred as of October 31, 2016 | 2,600 | |||
Expected positions to be eliminated | item | 30 | |||
Fiscal 2015 Plan | Employee Severance | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 351 | 0 | 0 | |
Restructuring charges | 932 | 351 | 0 | |
Cash Payments | (615) | 0 | 0 | |
Non-cash items | (39) | 0 | 0 | |
Balance at the end of the period | 629 | 351 | 0 | |
Total costs incurred to date as of October 31, 2016 | 1,283 | |||
Total expected costs to be incurred as of October 31, 2016 | 2,158 | |||
Fiscal 2015 Plan | Infrastructure and other | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 0 | 0 | 0 | |
Restructuring charges | 217 | 1 | 0 | |
Cash Payments | (132) | (1) | 0 | |
Non-cash items | (50) | 0 | 0 | |
Balance at the end of the period | 35 | 0 | 0 | |
Total costs incurred to date as of October 31, 2016 | 218 | |||
Total expected costs to be incurred as of October 31, 2016 | 451 | |||
Fiscal 2015 Plan | Real estate consolidation | ||||
Restructuring Reserve | ||||
Total expected costs to be incurred as of October 31, 2016 | 400 | |||
Fiscal 2012 Plan | ||||
Restructuring Reserve | ||||
Total costs incurred to date as of October 31, 2016 | 4,500 | |||
Fiscal 2012 Plan | Infrastructure and other | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 45 | 91 | 37 | |
Restructuring charges | 1 | 73 | 253 | |
Cash Payments | (22) | (116) | (198) | |
Non-cash items | (1) | (3) | (1) | |
Balance at the end of the period | 23 | 45 | 91 | |
Total costs incurred to date as of October 31, 2016 | 546 | |||
Total expected costs to be incurred as of October 31, 2016 | 546 | |||
Fiscal 2012 Plan | Employee Severance and EER | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 321 | 737 | 712 | |
Restructuring charges | 88 | 542 | 1,092 | |
Cash Payments | (263) | (884) | (978) | |
Non-cash items | (7) | (74) | (89) | |
Balance at the end of the period | 139 | $ 321 | 737 | |
Total costs incurred to date as of October 31, 2016 | 3,980 | |||
Total expected costs to be incurred as of October 31, 2016 | 3,980 | |||
Expected positions to be eliminated | position | 42,100 | |||
Other Plans | Employee Severance | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 1 | $ 8 | 9 | |
Restructuring charges | 0 | (4) | 0 | |
Cash Payments | 0 | 0 | (1) | |
Non-cash items | 0 | (3) | 0 | |
Balance at the end of the period | 1 | 1 | 8 | |
Total costs incurred to date as of October 31, 2016 | 1,997 | |||
Total expected costs to be incurred as of October 31, 2016 | 1,997 | |||
Other Plans | Infrastructure and other | ||||
Restructuring Reserve | ||||
Balance at the beginning of the period | 24 | 53 | 120 | |
Restructuring charges | (2) | (9) | (5) | |
Cash Payments | (11) | (20) | (62) | |
Non-cash items | (1) | 0 | 0 | |
Balance at the end of the period | 10 | $ 24 | $ 53 | |
Total costs incurred to date as of October 31, 2016 | 1,127 | |||
Total expected costs to be incurred as of October 31, 2016 | $ 1,127 |
Retirement and Post-Retiremen58
Retirement and Post-Retirement Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2015 | Oct. 31, 2014 | |
Shared plans | |||
Defined benefit plans | |||
Shared plan contribution | $ 518 | $ 277 | |
Non-U.S. Defined Benefit Plans | |||
Defined benefit plans | |||
Plan assets | $ 11,700 | 11,700 | |
Projected Benefit Obligation | 11,900 | ||
Recognized accumulated comprehensive loss | 2,600 | 2,600 | |
Defined benefit plan accumulated other comprehensive loss on transfer | 553 | ||
Post-Retirement Benefit Plans | |||
Defined benefit plans | |||
Recognized credits | 28 | $ 18 | |
Post-retirement benefit plan obligation transferred from Parent | 150 | 150 | |
Post-retirement benefit plan asset transferred from Parent | 40 | 40 | |
Recognized accumulated other comprehensive income transferred from parent | $ 10 | $ 10 |
Retirement and Post-Retiremen59
Retirement and Post-Retirement Benefit Plans (Details 2) - USD ($) $ in Millions | Jan. 01, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 |
Defined Contribution Plan Disclosure [Line Items] | ||||
Total defined contribution expense | $ 438 | $ 450 | $ 480 | |
Net benefit cost | $ 140 | $ 341 | 142 | |
HP 401(k) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percent of equal 401(k) match to employees effective during the period | 100.00% | |||
Percentage of maximum matching contribution | 4.00% | |||
Scenario, Forecast | HP 401(k) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percent of equal 401(k) match to employees effective during the period | 50.00% | |||
Percentage of maximum matching contribution | 6.00% | |||
Former Parent Company | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Net benefit cost | $ 201 | $ 6 |
Retirement and Post-Retiremen60
Retirement and Post-Retirement Benefit Plans (Details 3) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Amortization and deferrals: | |||
Net benefit cost | $ 140 | $ 341 | $ 142 |
U.S. Defined Benefit Plans | |||
Defined Benefit Plan Settlement Charges | |||
Defined benefit plan settlement charges | 225 | ||
Net benefit (credit) cost | |||
Service cost | 0 | 0 | 0 |
Interest cost | 0 | 16 | 15 |
Expected return on plan assets | 0 | 0 | 0 |
Amortization and deferrals: | |||
Actuarial loss | 0 | 2 | 2 |
Prior service benefit | 0 | 0 | 0 |
Net periodic benefit cost | 0 | 18 | 17 |
Curtailment gain | 0 | 0 | 0 |
Settlement loss | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 |
Net benefit cost | $ 0 | $ 18 | $ 17 |
Weighted average assumptions used to calculate net benefit (credit) cost | |||
Discount rate | 3.80% | 4.40% | 4.80% |
Expected increase in compensation levels | 2.00% | 0.00% | 0.00% |
Expected long-term return on plan assets | 0.00% | 0.00% | 0.00% |
Non-U.S. Defined Benefit Plans | |||
Net benefit (credit) cost | |||
Service cost | $ 254 | $ 121 | $ 74 |
Interest cost | 549 | 337 | 283 |
Expected return on plan assets | (983) | (570) | (364) |
Amortization and deferrals: | |||
Actuarial loss | 311 | 218 | 82 |
Prior service benefit | (24) | (6) | (2) |
Net periodic benefit cost | 107 | 100 | 73 |
Curtailment gain | (5) | 0 | (1) |
Settlement loss | 9 | 4 | 8 |
Special termination benefits | 25 | 18 | 39 |
Net benefit cost | $ 136 | $ 122 | $ 119 |
Weighted average assumptions used to calculate net benefit (credit) cost | |||
Discount rate | 3.00% | 3.00% | 4.20% |
Expected increase in compensation levels | 2.50% | 2.40% | 2.80% |
Expected long-term return on plan assets | 6.20% | 6.90% | 7.80% |
Post-Retirement Benefit Plans | |||
Net benefit (credit) cost | |||
Service cost | $ 3 | $ 0 | $ 0 |
Interest cost | 6 | 1 | 0 |
Expected return on plan assets | (2) | 0 | 0 |
Amortization and deferrals: | |||
Actuarial loss | (3) | 0 | 0 |
Prior service benefit | 0 | (1) | 0 |
Net periodic benefit cost | 4 | 0 | 0 |
Curtailment gain | 0 | 0 | 0 |
Settlement loss | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 |
Net benefit cost | $ 4 | $ 0 | $ 0 |
Weighted average assumptions used to calculate net benefit (credit) cost | |||
Discount rate | 4.60% | 4.70% | 0.00% |
Expected increase in compensation levels | 0.00% | 0.00% | 0.00% |
Expected long-term return on plan assets | 4.00% | 0.00% | 0.00% |
Retirement and Post-Retiremen61
Retirement and Post-Retirement Benefit Plans (Details 4) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2015USD ($)item | Oct. 31, 2016USD ($) | Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | |
Change in benefit obligation: | ||||
Settlement | $ 0 | $ (225) | $ 0 | |
U.S. Defined Benefit Plans | ||||
Change in fair value of plan assets: | ||||
Fair value—beginning of year | 0 | 0 | ||
Transfer from Parent | 0 | 0 | ||
Acquisition/divestiture/addition/deletion of plans(2) | 0 | 0 | ||
Actual return on plan assets | 0 | 0 | ||
Employer contributions | 0 | 21 | ||
Participant contributions | 0 | 0 | ||
Benefits paid | 0 | (21) | ||
Settlement | 0 | 0 | ||
Currency impact | 0 | 0 | ||
Fair value—end of year | $ 0 | 0 | 0 | 0 |
Change in benefit obligation: | ||||
Projected benefit obligation—beginning of year | 7 | 370 | ||
Merged into Parent's Shared plan | 0 | (365) | ||
Transfer from Parent | 0 | 7 | ||
Acquisition/divestiture/addition/deletion of plans(2) | 0 | 0 | ||
Service cost | 0 | 0 | 0 | |
Interest cost | 0 | 16 | 15 | |
Participant contributions | 0 | 0 | ||
Actuarial loss (gain) | 0 | 0 | ||
Benefits paid | 0 | (21) | ||
Plan amendments | 0 | 0 | ||
Curtailment | 0 | 0 | ||
Settlement | 0 | 0 | ||
Special termination benefits | 0 | 0 | ||
Currency impact | 0 | 0 | ||
Projected benefit obligation—end of year | 7 | 7 | 7 | 370 |
Funded status at end of year | (7) | (7) | (7) | |
Accumulated benefit obligation | $ 7 | $ 7 | $ 7 | |
Number of unfunded non-qualified U.S. defined benefit plans transferred to Parent | item | 3 | |||
Weighted average assumptions used to calculate the projected benefit obligations for Direct plans: | ||||
Discount rate | 3.80% | 3.20% | 3.80% | |
Expected increase in compensation levels | 2.00% | 2.00% | 2.00% | |
Net amounts recognized for the Direct plans in Combined and Consolidated Balance Sheets: | ||||
Noncurrent assets | $ 0 | $ 0 | $ 0 | |
Current liabilities | (2) | (2) | (2) | |
Noncurrent liabilities | (5) | (5) | (5) | |
Funded status at end of year | (7) | (7) | (7) | |
Pretax net actuarial loss (gain) and prior service benefit recognized in accumulated other comprehensive loss for and prior service benefit recognized in Accumulated other comprehensive loss for the Direct defined benefit plans: | ||||
Net actuarial loss (gain) | 0 | |||
Prior service benefit | 0 | |||
Total recognized in accumulated other comprehensive loss | 0 | |||
Net actuarial loss and prior service benefit for Direct plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit): | ||||
Net actuarial loss (gain) | 0 | |||
Prior service benefit | 0 | |||
Total expected to be recognized in net periodic benefit cost (credit) | 0 | |||
Direct defined benefit plans with projected benefit obligations exceeding the fair value of plan assets: | ||||
Aggregate fair value of plan assets | 0 | 0 | 0 | |
Aggregate projected benefit obligation | 7 | 7 | 7 | |
Direct defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets: | ||||
Aggregate fair value of plan assets | 0 | 0 | 0 | |
Aggregate accumulated benefit obligation | 7 | 7 | 7 | |
Non-U.S. Defined Benefit Plans | ||||
Change in fair value of plan assets: | ||||
Fair value—beginning of year | 16,624 | 5,098 | ||
Transfer from Parent | 0 | 11,667 | ||
Acquisition/divestiture/addition/deletion of plans(2) | 138 | (4) | ||
Actual return on plan assets | 2,104 | 512 | ||
Employer contributions | 328 | 132 | ||
Participant contributions | 41 | 7 | ||
Benefits paid | (518) | (273) | ||
Settlement | (33) | (8) | ||
Currency impact | (2,022) | (507) | ||
Fair value—end of year | 16,624 | 16,662 | 16,624 | 5,098 |
Change in benefit obligation: | ||||
Projected benefit obligation—beginning of year | 19,439 | 7,335 | ||
Merged into Parent's Shared plan | 0 | 0 | ||
Transfer from Parent | 0 | 12,262 | ||
Acquisition/divestiture/addition/deletion of plans(2) | (20) | (3) | ||
Service cost | 254 | 121 | 74 | |
Interest cost | 549 | 337 | 283 | |
Participant contributions | 41 | 7 | ||
Actuarial loss (gain) | 3,018 | 409 | ||
Benefits paid | (518) | (273) | ||
Plan amendments | 1 | (82) | ||
Curtailment | (18) | 0 | ||
Settlement | (33) | (8) | ||
Special termination benefits | 25 | 18 | ||
Currency impact | (2,374) | (684) | ||
Projected benefit obligation—end of year | 19,439 | 20,364 | 19,439 | 7,335 |
Funded status at end of year | (2,815) | (3,702) | (2,815) | |
Accumulated benefit obligation | $ 18,706 | $ 19,829 | $ 18,706 | |
Weighted average assumptions used to calculate the projected benefit obligations for Direct plans: | ||||
Discount rate | 3.00% | 2.00% | 3.00% | |
Expected increase in compensation levels | 2.50% | 2.40% | 2.50% | |
Net amounts recognized for the Direct plans in Combined and Consolidated Balance Sheets: | ||||
Noncurrent assets | $ 495 | $ 378 | $ 495 | |
Current liabilities | (38) | (43) | (38) | |
Noncurrent liabilities | (3,272) | (4,037) | (3,272) | |
Funded status at end of year | (2,815) | (3,702) | (2,815) | |
Pretax net actuarial loss (gain) and prior service benefit recognized in accumulated other comprehensive loss for and prior service benefit recognized in Accumulated other comprehensive loss for the Direct defined benefit plans: | ||||
Net actuarial loss (gain) | 5,800 | |||
Prior service benefit | (184) | |||
Total recognized in accumulated other comprehensive loss | 5,616 | |||
Net actuarial loss and prior service benefit for Direct plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit): | ||||
Net actuarial loss (gain) | 446 | |||
Prior service benefit | 24 | |||
Total expected to be recognized in net periodic benefit cost (credit) | 422 | |||
Direct defined benefit plans with projected benefit obligations exceeding the fair value of plan assets: | ||||
Aggregate fair value of plan assets | 8,510 | 10,508 | 8,510 | |
Aggregate projected benefit obligation | 11,820 | 14,587 | 11,820 | |
Direct defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets: | ||||
Aggregate fair value of plan assets | 8,449 | 10,171 | 8,449 | |
Aggregate accumulated benefit obligation | 11,195 | 13,765 | 11,195 | |
Post-Retirement Benefit Plans | ||||
Change in fair value of plan assets: | ||||
Fair value—beginning of year | 40 | 0 | ||
Transfer from Parent | 0 | 40 | ||
Acquisition/divestiture/addition/deletion of plans(2) | 0 | 0 | ||
Actual return on plan assets | 1 | 0 | ||
Employer contributions | 3 | 1 | ||
Participant contributions | 6 | 0 | ||
Benefits paid | (3) | (1) | ||
Settlement | 0 | 0 | ||
Currency impact | 0 | 0 | ||
Fair value—end of year | 40 | 47 | 40 | 0 |
Change in benefit obligation: | ||||
Projected benefit obligation—beginning of year | 139 | 0 | ||
Merged into Parent's Shared plan | 0 | 0 | ||
Transfer from Parent | 0 | 150 | ||
Acquisition/divestiture/addition/deletion of plans(2) | 0 | 0 | ||
Service cost | 3 | 0 | 0 | |
Interest cost | 6 | 1 | 0 | |
Participant contributions | 6 | 0 | ||
Actuarial loss (gain) | 6 | (10) | ||
Benefits paid | (3) | (1) | ||
Plan amendments | 0 | 0 | ||
Curtailment | 0 | 0 | ||
Settlement | 0 | 0 | ||
Special termination benefits | 0 | 0 | ||
Currency impact | 1 | (1) | ||
Projected benefit obligation—end of year | 139 | 158 | 139 | $ 0 |
Funded status at end of year | (99) | (111) | (99) | |
Accumulated benefit obligation | $ 0 | $ 0 | $ 0 | |
Weighted average assumptions used to calculate the projected benefit obligations for Direct plans: | ||||
Discount rate | 4.60% | 4.20% | 4.60% | |
Expected increase in compensation levels | 0.00% | 0.00% | 0.00% | |
Net amounts recognized for the Direct plans in Combined and Consolidated Balance Sheets: | ||||
Noncurrent assets | $ 0 | $ 0 | $ 0 | |
Current liabilities | (3) | (3) | (3) | |
Noncurrent liabilities | (96) | (108) | (96) | |
Funded status at end of year | $ (99) | (111) | $ (99) | |
Pretax net actuarial loss (gain) and prior service benefit recognized in accumulated other comprehensive loss for and prior service benefit recognized in Accumulated other comprehensive loss for the Direct defined benefit plans: | ||||
Net actuarial loss (gain) | (9) | |||
Prior service benefit | 0 | |||
Total recognized in accumulated other comprehensive loss | (9) | |||
Net actuarial loss and prior service benefit for Direct plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit): | ||||
Net actuarial loss (gain) | (3) | |||
Prior service benefit | 0 | |||
Total expected to be recognized in net periodic benefit cost (credit) | $ (3) |
Retirement and Post-Retiremen62
Retirement and Post-Retirement Benefit Plans (Details 5) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 |
Non-U.S. Defined Benefit Plans | |||
Defined benefit plans | |||
Fair value of plan assets | $ 16,662 | $ 16,624 | $ 5,098 |
Non-U.S. Defined Benefit Plans | U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 740 | 837 | |
Non-U.S. Defined Benefit Plans | Non-U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 1,333 | 2,386 | |
Non-U.S. Defined Benefit Plans | Corporate | |||
Defined benefit plans | |||
Fair value of plan assets | 2,558 | 2,646 | |
Non-U.S. Defined Benefit Plans | Government debt securities | |||
Defined benefit plans | |||
Fair value of plan assets | 805 | 843 | |
Non-U.S. Defined Benefit Plans | Private Equity | |||
Defined benefit plans | |||
Fair value of plan assets | 72 | 69 | |
Non-U.S. Defined Benefit Plans | Hybrids | |||
Defined benefit plans | |||
Fair value of plan assets | 458 | 2,576 | |
Non-U.S. Defined Benefit Plans | Hybrids At NAV [Member] | |||
Defined benefit plans | |||
Fair value of plan assets | 2,851 | 343 | |
Non-U.S. Defined Benefit Plans | Hedge Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 235 | 320 | |
Non-U.S. Defined Benefit Plans | Equities at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | 3,125 | 2,821 | |
Non-U.S. Defined Benefit Plans | Fixed Income at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | 948 | 993 | |
Non-U.S. Defined Benefit Plans | Emerging Markets at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | 955 | 844 | |
Non-U.S. Defined Benefit Plans | Alternative investments at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | 367 | 297 | |
Non-U.S. Defined Benefit Plans | Real Estate Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 791 | 1,051 | |
Non-U.S. Defined Benefit Plans | Insurance Group Annuity Contracts | |||
Defined benefit plans | |||
Fair value of plan assets | 101 | 117 | |
Non-U.S. Defined Benefit Plans | Cash and cash equivalents | |||
Defined benefit plans | |||
Fair value of plan assets | 1,061 | 372 | |
Non-U.S. Defined Benefit Plans | Other | |||
Defined benefit plans | |||
Fair value of plan assets | 262 | 109 | |
Non-U.S. Defined Benefit Plans | Level 1 | |||
Defined benefit plans | |||
Fair value of plan assets | 3,075 | 3,573 | |
Non-U.S. Defined Benefit Plans | Level 1 | U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 706 | 772 | |
Non-U.S. Defined Benefit Plans | Level 1 | Non-U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 1,022 | 1,910 | |
Non-U.S. Defined Benefit Plans | Level 1 | Corporate | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | Government debt securities | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | Private Equity | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | Hybrids | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | Hybrids At NAV [Member] | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 1 | Hedge Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 11 | |
Non-U.S. Defined Benefit Plans | Level 1 | Equities at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 1 | Fixed Income at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 1 | Emerging Markets at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 1 | Alternative investments at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 1 | Real Estate Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 215 | 447 | |
Non-U.S. Defined Benefit Plans | Level 1 | Insurance Group Annuity Contracts | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | Cash and cash equivalents | |||
Defined benefit plans | |||
Fair value of plan assets | 1,061 | 372 | |
Non-U.S. Defined Benefit Plans | Level 1 | Other | |||
Defined benefit plans | |||
Fair value of plan assets | 71 | 61 | |
Non-U.S. Defined Benefit Plans | Level 1 | Nominal And/or Inflation Linked Returns | |||
Defined benefit plans | |||
Fair value of plan assets | 2,478 | 0 | |
Non-U.S. Defined Benefit Plans | Level 1 | FTSE All World Developed Index | |||
Defined benefit plans | |||
Fair value of plan assets | 373 | 343 | |
Non-U.S. Defined Benefit Plans | Level 2 | |||
Defined benefit plans | |||
Fair value of plan assets | 4,610 | 6,706 | |
Non-U.S. Defined Benefit Plans | Level 2 | U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 34 | 65 | |
Non-U.S. Defined Benefit Plans | Level 2 | Non-U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 227 | 408 | |
Non-U.S. Defined Benefit Plans | Level 2 | Corporate | |||
Defined benefit plans | |||
Fair value of plan assets | 2,558 | 2,646 | |
Non-U.S. Defined Benefit Plans | Level 2 | Government debt securities | |||
Defined benefit plans | |||
Fair value of plan assets | 805 | 843 | |
Non-U.S. Defined Benefit Plans | Level 2 | Private Equity | |||
Defined benefit plans | |||
Fair value of plan assets | 4 | 1 | |
Non-U.S. Defined Benefit Plans | Level 2 | Hybrids | |||
Defined benefit plans | |||
Fair value of plan assets | 458 | 2,576 | |
Non-U.S. Defined Benefit Plans | Level 2 | Hybrids At NAV [Member] | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 2 | Hedge Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 148 | 73 | |
Non-U.S. Defined Benefit Plans | Level 2 | Equities at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 2 | Fixed Income at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 2 | Emerging Markets at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 2 | Alternative investments at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 2 | Real Estate Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 269 | 33 | |
Non-U.S. Defined Benefit Plans | Level 2 | Insurance Group Annuity Contracts | |||
Defined benefit plans | |||
Fair value of plan assets | 38 | 48 | |
Non-U.S. Defined Benefit Plans | Level 2 | Cash and cash equivalents | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 2 | Other | |||
Defined benefit plans | |||
Fair value of plan assets | 69 | 13 | |
Non-U.S. Defined Benefit Plans | Level 3 | |||
Defined benefit plans | |||
Fair value of plan assets | 731 | 1,047 | 369 |
Non-U.S. Defined Benefit Plans | Level 3 | U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 3 | Non-U.S. | |||
Defined benefit plans | |||
Fair value of plan assets | 84 | 68 | 0 |
Non-U.S. Defined Benefit Plans | Level 3 | Corporate | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 3 | Government debt securities | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 3 | Private Equity | |||
Defined benefit plans | |||
Fair value of plan assets | 68 | 68 | 28 |
Non-U.S. Defined Benefit Plans | Level 3 | Hybrids | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 3 | Hybrids At NAV [Member] | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 3 | Hedge Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 87 | 236 | 0 |
Non-U.S. Defined Benefit Plans | Level 3 | Equities at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 3 | Fixed Income at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 3 | Emerging Markets at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 3 | Alternative investments at NAV | |||
Defined benefit plans | |||
Fair value of plan assets | |||
Non-U.S. Defined Benefit Plans | Level 3 | Real Estate Funds | |||
Defined benefit plans | |||
Fair value of plan assets | 307 | 571 | 336 |
Non-U.S. Defined Benefit Plans | Level 3 | Insurance Group Annuity Contracts | |||
Defined benefit plans | |||
Fair value of plan assets | 63 | 69 | 5 |
Non-U.S. Defined Benefit Plans | Level 3 | Cash and cash equivalents | |||
Defined benefit plans | |||
Fair value of plan assets | 0 | 0 | |
Non-U.S. Defined Benefit Plans | Level 3 | Other | |||
Defined benefit plans | |||
Fair value of plan assets | 122 | 35 | 0 |
Post-Retirement Benefit Plans | |||
Defined benefit plans | |||
Fair value of plan assets | 47 | 40 | $ 0 |
Post-Retirement Benefit Plans | Registered Investment Companies | |||
Defined benefit plans | |||
Fair value of plan assets | $ 47 | $ 40 |
Retirement and Post-Retiremen63
Retirement and Post-Retirement Benefit Plans (Details 6) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Oct. 31, 2016 | Oct. 31, 2015 | |
Future Contributions and Funding Policy | |||
Net pension liability transfer threshold | $ 570 | ||
Non-U.S. Defined Benefit Plans | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 16,624 | $ 5,098 | |
Transfer from Parent | 0 | 11,667 | |
Actual return on plan assets: | |||
Fair value—end of year | $ 16,662 | $ 16,624 | |
2016 Target Allocation | 100.00% | ||
Plan Assets | 100.00% | 100.00% | |
Future Contributions and Funding Policy | |||
Expected contribution to defined benefit plans in fiscal 2016 | $ 348 | ||
Transfer | 0 | $ 12,262 | |
Initial funding payments | 328 | 132 | |
Future benefits payable for the retirement and post-retirement plans | |||
2,017 | 527 | ||
2,019 | 505 | ||
2,020 | 542 | ||
2,021 | 579 | ||
2,020 | 608 | ||
Next five fiscal years to October 31, 2026 | 3,515 | ||
Non-U.S. Defined Benefit Plans | Equity Securities Non-U.S. | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 2,386 | ||
Actual return on plan assets: | |||
Fair value—end of year | 1,333 | 2,386 | |
Non-U.S. Defined Benefit Plans | Private Equity | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 69 | ||
Actual return on plan assets: | |||
Fair value—end of year | $ 72 | $ 69 | |
Plan Assets | 22.50% | 19.80% | |
Non-U.S. Defined Benefit Plans | Hedge Funds | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | $ 320 | ||
Actual return on plan assets: | |||
Fair value—end of year | 235 | $ 320 | |
Non-U.S. Defined Benefit Plans | Real Estate Funds | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 1,051 | ||
Actual return on plan assets: | |||
Fair value—end of year | $ 791 | $ 1,051 | |
Plan Assets | 6.30% | 7.00% | |
Non-U.S. Defined Benefit Plans | Insurance Group Annuity Contracts | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | $ 117 | ||
Actual return on plan assets: | |||
Fair value—end of year | 101 | $ 117 | |
Non-U.S. Defined Benefit Plans | Other | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 109 | ||
Actual return on plan assets: | |||
Fair value—end of year | $ 262 | $ 109 | |
Non-U.S. Defined Benefit Plans | Public equity securities | |||
Actual return on plan assets: | |||
Plan Assets | 38.30% | 43.40% | |
Non-U.S. Defined Benefit Plans | Equity-related investments | |||
Actual return on plan assets: | |||
2016 Target Allocation | 64.70% | ||
Plan Assets | 67.10% | 70.20% | |
Non-U.S. Defined Benefit Plans | Debt securities | |||
Actual return on plan assets: | |||
2016 Target Allocation | 34.50% | ||
Plan Assets | 26.50% | 27.60% | |
Non-U.S. Defined Benefit Plans | Cash and cash equivalents | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | $ 372 | ||
Actual return on plan assets: | |||
Fair value—end of year | $ 1,061 | $ 372 | |
2016 Target Allocation | 0.80% | ||
Plan Assets | 6.40% | 2.20% | |
Post-Retirement Benefit Plans | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | $ 40 | $ 0 | |
Transfer from Parent | 0 | 40 | |
Actual return on plan assets: | |||
Fair value—end of year | $ 47 | $ 40 | |
2016 Target Allocation | 100.00% | ||
Plan Assets | 100.00% | 100.00% | |
Future Contributions and Funding Policy | |||
Expected contribution to defined benefit plans in fiscal 2016 | $ 3 | ||
Transfer | 0 | $ 150 | |
Initial funding payments | 3 | $ 1 | |
Future benefits payable for the retirement and post-retirement plans | |||
2,017 | 4 | ||
2,019 | 5 | ||
2,020 | 6 | ||
2,021 | 7 | ||
2,020 | 8 | ||
Next five fiscal years to October 31, 2026 | $ 54 | ||
Post-Retirement Benefit Plans | Private Equity | |||
Actual return on plan assets: | |||
Plan Assets | 0.00% | 0.00% | |
Post-Retirement Benefit Plans | Real Estate Funds | |||
Actual return on plan assets: | |||
Plan Assets | 0.00% | 0.00% | |
Post-Retirement Benefit Plans | Public equity securities | |||
Actual return on plan assets: | |||
Plan Assets | 0.00% | 0.00% | |
Post-Retirement Benefit Plans | Equity-related investments | |||
Actual return on plan assets: | |||
2016 Target Allocation | 0.00% | ||
Plan Assets | 0.00% | 0.00% | |
Post-Retirement Benefit Plans | Debt securities | |||
Actual return on plan assets: | |||
2016 Target Allocation | 90.00% | ||
Plan Assets | 90.20% | 97.20% | |
Post-Retirement Benefit Plans | Cash and cash equivalents | |||
Actual return on plan assets: | |||
2016 Target Allocation | 10.00% | ||
Plan Assets | 9.80% | 2.80% | |
U.S. Defined Benefit Plans | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | $ 0 | $ 0 | |
Transfer from Parent | 0 | 0 | |
Actual return on plan assets: | |||
Fair value—end of year | 0 | 0 | |
Future Contributions and Funding Policy | |||
Transfer | 0 | 7 | |
Initial funding payments | 0 | 21 | |
Future benefits payable for the retirement and post-retirement plans | |||
2,017 | 2 | ||
2,019 | 0 | ||
2,020 | 1 | ||
2,021 | 0 | ||
2,020 | 1 | ||
Next five fiscal years to October 31, 2026 | 2 | ||
U.S. non-qualified plan participants | |||
Future Contributions and Funding Policy | |||
Expected contribution to defined benefit plans in fiscal 2016 | 2 | ||
Level 3 | Non-U.S. Defined Benefit Plans | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 1,047 | 369 | |
Transfer from Parent | 407 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (119) | 21 | |
Relating to assets sold during the period | 1 | 5 | |
Purchases, sales, and settlements | 67 | 61 | |
Transfers in and/or out of Level 3 | (265) | 184 | |
Fair value—end of year | 731 | 1,047 | |
Level 3 | Non-U.S. Defined Benefit Plans | Equity Securities Non-U.S. | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 68 | 0 | |
Transfer from Parent | 81 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | 16 | (13) | |
Relating to assets sold during the period | 0 | 0 | |
Purchases, sales, and settlements | 0 | 0 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Fair value—end of year | 84 | 68 | |
Level 3 | Non-U.S. Defined Benefit Plans | Private Equity | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 68 | 28 | |
Transfer from Parent | 19 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (1) | (1) | |
Relating to assets sold during the period | 4 | 5 | |
Purchases, sales, and settlements | (3) | 10 | |
Transfers in and/or out of Level 3 | 0 | 7 | |
Fair value—end of year | 68 | 68 | |
Level 3 | Non-U.S. Defined Benefit Plans | Hedge Funds | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 236 | 0 | |
Transfer from Parent | 192 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (35) | 7 | |
Relating to assets sold during the period | 0 | 0 | |
Purchases, sales, and settlements | (11) | 36 | |
Transfers in and/or out of Level 3 | (103) | 1 | |
Fair value—end of year | 87 | 236 | |
Level 3 | Non-U.S. Defined Benefit Plans | Real Estate Funds | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 571 | 336 | |
Transfer from Parent | 23 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (96) | 23 | |
Relating to assets sold during the period | 0 | 0 | |
Purchases, sales, and settlements | 2 | 15 | |
Transfers in and/or out of Level 3 | (170) | 174 | |
Fair value—end of year | 307 | 571 | |
Level 3 | Non-U.S. Defined Benefit Plans | Insurance Group Annuity Contracts | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 69 | 5 | |
Transfer from Parent | 58 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (2) | 4 | |
Relating to assets sold during the period | (3) | 0 | |
Purchases, sales, and settlements | (3) | 0 | |
Transfers in and/or out of Level 3 | 2 | 2 | |
Fair value—end of year | 63 | 69 | |
Level 3 | Non-U.S. Defined Benefit Plans | Other | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 35 | 0 | |
Transfer from Parent | 34 | ||
Actual return on plan assets: | |||
Relating to assets held at the reporting date | (1) | 1 | |
Relating to assets sold during the period | 0 | 0 | |
Purchases, sales, and settlements | 82 | 0 | |
Transfers in and/or out of Level 3 | 6 | 0 | |
Fair value—end of year | 122 | 35 | |
Level 3 | Non-U.S. Defined Benefit Plans | Cash and cash equivalents | |||
Changes in fair value measurements of Level 3 investments | |||
Fair value—beginning of year | 0 | ||
Actual return on plan assets: | |||
Fair value—end of year | 0 | $ 0 | |
Minimum | Non-U.S. Defined Benefit Plans | |||
Future Contributions and Funding Policy | |||
Transfer | 2,000 | ||
Maximum | Non-U.S. Defined Benefit Plans | |||
Future Contributions and Funding Policy | |||
Transfer | $ 3,000 | ||
Subsequent Event | Non-U.S. Defined Benefit Plans | |||
Future Contributions and Funding Policy | |||
Initial funding payments | $ 1,900 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Detail) - USD ($) | Nov. 01, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 |
Stock-Based Compensation | ||||
Common stock, authorized (shares) | 9,600,000,000 | |||
Stock-based compensation expense | $ 597,000,000 | $ 565,000,000 | $ 427,000,000 | |
Income tax benefit | (181,000,000) | (165,000,000) | (141,000,000) | |
Stock-based compensation expense, net of tax | 416,000,000 | 400,000,000 | 286,000,000 | |
Separation costs | 598,000,000 | 797,000,000 | 0 | |
Restructuring charges | $ 1,236,000,000 | 954,000,000 | 1,471,000,000 | |
Increased expense due to the acceleration | $ 61,000,000 | |||
Shares | ||||
Outstanding at end of period (in shares) | 0 | 0 | ||
Outstanding at end of period (in shares) | 0 | |||
Weighted- Average Exercise Price | ||||
Outstanding at beginning of period (in dollars per share) | $ 0 | $ 0 | ||
Outstanding at end of period (in dollars per share) | $ 0 | |||
Employee Stock Purchase Plan | ||||
Stock-Based Compensation | ||||
Common stock, authorized (shares) | 80,000,000 | |||
Stock-based compensation expense, net of tax | $ 0 | $ 0 | ||
Cash received from option exercises and purchases | $ 119,000,000 | 21,000,000 | 154,000,000 | |
Benefit realized for the tax deduction from option exercises of share-based payment awards | 45,000,000 | 42,000,000 | ||
Corporate and unallocated assets | HP Inc. | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 151,000,000 | $ 113,000,000 | ||
Restricted Stock Awards | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 24,400,000 | 24,400,000 | 24,496,000 | 18,170,000 |
Converted from former Parent's plan (in shares) | 0 | 0 | ||
Granted and assumed through acquisition (in shares) | 19,601,000 | 15,820,000 | ||
Vested (in shares) | (21,860,000) | (7,893,000) | ||
Forfeited (in shares) | (1,819,000) | (1,601,000) | ||
Employee transition (in shares) | 3,982,000 | 0 | ||
Outstanding at end of period (in shares) | 24,400,000 | 24,496,000 | ||
Weighted- Average Grant Date Fair Value Per Share | ||||
Outstanding at beginning of period (in dollars per share) | $ 32 | $ 32 | $ 24 | $ 20 |
Converted from former Parent's plan (in dollars per share) | 0 | 0 | ||
Granted (in dollars per share) | 35 | 28 | ||
Vested (in dollars per share) | 26 | 24 | ||
Forfeited (in dollars per share) | 30 | 22 | ||
Employee transition (in dollars per share) | 33 | 0 | ||
Outstanding at end of period (in dollars per share) | $ 32 | $ 24 | ||
Total grant date fair value of restricted stock vested | $ 130,000,000 | $ 451,000,000 | $ 128,000,000 | |
Additional disclosures information | ||||
Restricted stock unit assumed through acquisition (in shares) | 8,000,000 | |||
Wighted-average grant date fair value through acquisition (in dollars per share) | $ 33 | |||
Unrecognized pre-tax stock-based compensation expense and recognition period | ||||
Unrecognized pre-tax stock-based compensation expense | $ 463,000,000 | |||
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 2 months 12 days | |||
Shares | ||||
Outstanding at end of period (in shares) | 24,496,000 | |||
Outstanding at end of period (in shares) | 24,496,000 | |||
The Plan | ||||
Stock-Based Compensation | ||||
Number of shares authorized and available for issuance (shares) | 260,000,000 | |||
Cash-settled awards and restricted stock awards | Minimum | ||||
Stock-Based Compensation | ||||
Vesting period | 1 year | |||
Cash-settled awards and restricted stock awards | Maximum | ||||
Stock-Based Compensation | ||||
Vesting period | 3 years | |||
Stock Options | ||||
Stock-Based Compensation | ||||
Total grant date fair value of options vested | $ 18,000,000 | $ 38,000,000 | $ 46,000,000 | |
Unrecognized pre-tax stock-based compensation expense and recognition period | ||||
Unrecognized pre-tax stock-based compensation expense | $ 58,000,000 | |||
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 9 months 18 days | |||
Weighted-average fair value and the assumptions used to measure fair value | ||||
Weighted- average fair value of grants per option (in dollars per share) | $ 4 | $ 8 | $ 7 | |
Expected volatility (as a percent) | 31.10% | 26.80% | 33.10% | |
Risk-free interest rate (as a percent) | 1.70% | 1.70% | 1.80% | |
Expected dividend yield (as a percent) | 1.50% | 1.80% | 2.10% | |
Expected term in years | 5 years 4 months 12 days | 5 years 10 months 24 days | 5 years 8 months 12 days | |
Shares | ||||
Outstanding at end of period (in shares) | 26,178,000 | 26,178,000 | 24,472,000 | 37,433,000 |
Converted from former Parent's plan (in shares) | 42,579,000 | 0 | 0 | |
Granted and assumed through acquisitions (in shares) | 25,390,000 | 3,147,000 | 4,255,000 | |
Exercised (in shares) | (7,845,000) | (5,716,000) | (5,533,000) | |
Forfeited/cancelled/expired (in shares) | (2,626,000) | (7,116,000) | (11,683,000) | |
Employee transition (in shares) | 0 | 11,391,000 | 0 | |
Outstanding at end of period (in shares) | 57,498,000 | 26,178,000 | 24,472,000 | |
Vested and expected to vest at end of period (in shares) | 55,716,000 | 25,309,000 | 23,152,000 | |
Exercisable at end of period (in shares) | 26,204,000 | 18,767,000 | 14,174,000 | |
Weighted- Average Exercise Price | ||||
Outstanding at beginning of period (in dollars per share) | $ 26 | $ 26 | $ 27 | $ 26 |
Converted from former Parent's plan (in dollars per share) | 15 | 0 | 0 | |
Granted and assumed through acquisition (in dollars per share) | 15 | 37 | 28 | |
Exercised (in dollars per share) | 11 | 18 | 18 | |
Forfeited/cancelled/expired (in dollars per share) | 20 | 40 | 37 | |
Employee transition (in dollars per share) | 0 | 26 | 0 | |
Outstanding at end of period (in dollars per share) | 15 | 26 | 27 | |
Vested and expected to vest at end of period (in dollars per share) | 15 | 26 | 27 | |
Exercisable at end of period (in dollars per share) | $ 13 | $ 23 | $ 31 | |
Weighted- Average Remaining Contractual Term | ||||
Outstanding at end of year | 5 years 4 months 12 days | 5 years 2 months 12 days | 4 years 2 months 12 days | |
Vested and expected to vest at end of year | 5 years 3 months 12 days | 5 years 2 months 12 days | 4 years | |
Exercisable at end of year | 3 years 9 months 12 days | 4 years 8 months 12 days | 2 years 6 months | |
Aggregate Intrinsic Value | ||||
Outstanding at end of year | $ 437,000,000 | $ 115,000,000 | $ 272,000,000 | |
Vested and expected to vest at end of year | 425,000,000 | 115,000,000 | 252,000,000 | |
Exercisable at end of year | 241,000,000 | 109,000,000 | 119,000,000 | |
Options exercised | $ 62,000,000 | $ 94,000,000 | $ 78,000,000 | |
Stock Options | Minimum | ||||
Stock-Based Compensation | ||||
Vesting period | 3 years | |||
Stock Options | Maximum | ||||
Stock-Based Compensation | ||||
Vesting period | 4 years | |||
The Plan | Restricted Stock Awards | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 0 | 0 | ||
Converted from former Parent's plan (in shares) | 42,012,000 | |||
Granted and assumed through acquisition (in shares) | 32,752,000 | |||
Vested (in shares) | (12,747,000) | |||
Forfeited (in shares) | (4,696,000) | |||
Employee transition (in shares) | 0 | |||
Outstanding at end of period (in shares) | 57,321,000 | 0 | ||
Weighted- Average Grant Date Fair Value Per Share | ||||
Outstanding at beginning of period (in dollars per share) | $ 0 | $ 0 | ||
Converted from former Parent's plan (in dollars per share) | 15 | |||
Granted (in dollars per share) | 15 | |||
Vested (in dollars per share) | 15 | |||
Forfeited (in dollars per share) | 15 | |||
Employee transition (in dollars per share) | 0 | |||
Outstanding at end of period (in dollars per share) | $ 15 | $ 0 | ||
One Time Retention Stock Awards | Restricted Stock Awards | ||||
Shares | ||||
Granted and assumed through acquisition (in shares) | 5,000,000 | |||
One Time Retention Stock Awards | The Plan | ||||
Stock-Based Compensation | ||||
Total grant date fair value of options vested | $ 137,000,000 | |||
Vesting period | 3 years | |||
One Time Retention Stock Awards | Stock Options | ||||
Shares | ||||
Granted and assumed through acquisitions (in shares) | 16,000,000 | |||
The Plan | ||||
Stock-Based Compensation | ||||
Separation costs | $ 31,000,000 | |||
Restructuring charges | $ 8,000,000 | |||
Former Parent Company | Employee Stock Purchase Plan | ||||
Stock-Based Compensation | ||||
Cash received from option exercises and purchases | $ 165,000,000 |
Stock-Based Compensation (Det65
Stock-Based Compensation (Detail 2) - Stock Options shares in Thousands | 12 Months Ended |
Oct. 31, 2016$ / sharesshares | |
Information about options outstanding, by exercise price range | |
Options Outstanding - Shares Outstanding (shares) | shares | 57,498 |
Weighted- Average Remaining Contractual Term | 5 years 4 months 12 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 15 |
Options Exercisable - Shares Exercisable (shares) | shares | 26,204 |
Options Exercisable - Weighted-Average Exercise Price (in dollars per share) | $ 13 |
$0-$9.99 | |
Information about options outstanding, by exercise price range | |
Exercise price range, lower range limit (in dollars per share) | 0 |
Exercise price range, upper range limit (in dollars per share) | $ 9.99 |
Options Outstanding - Shares Outstanding (shares) | shares | 7,321 |
Weighted- Average Remaining Contractual Term | 3 years 8 months 12 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 8 |
Options Exercisable - Shares Exercisable (shares) | shares | 8,905 |
Options Exercisable - Weighted-Average Exercise Price (in dollars per share) | $ 8 |
$10-$19.99 | |
Information about options outstanding, by exercise price range | |
Exercise price range, lower range limit (in dollars per share) | 10 |
Exercise price range, upper range limit (in dollars per share) | $ 19.99 |
Options Outstanding - Shares Outstanding (shares) | shares | 39,881 |
Weighted- Average Remaining Contractual Term | 5 years 8 months 12 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 15 |
Options Exercisable - Shares Exercisable (shares) | shares | 13,289 |
Options Exercisable - Weighted-Average Exercise Price (in dollars per share) | $ 14 |
$20-$29.99 | |
Information about options outstanding, by exercise price range | |
Exercise price range, lower range limit (in dollars per share) | 20 |
Exercise price range, upper range limit (in dollars per share) | $ 29.99 |
Options Outstanding - Shares Outstanding (shares) | shares | 10,296 |
Weighted- Average Remaining Contractual Term | 5 years 2 months 12 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 21 |
Options Exercisable - Shares Exercisable (shares) | shares | 4,010 |
Options Exercisable - Weighted-Average Exercise Price (in dollars per share) | $ 22 |
Stock-Based Compensation (Det66
Stock-Based Compensation (Details 3) - USD ($) | 12 Months Ended | |||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Nov. 01, 2015 | |
Share-based compensation | ||||
Common stock, authorized (shares) | 9,600,000,000 | |||
Maximum contribution limit as percentage of base compensation (as a percent) | 15.00% | |||
Offering period | 24 months | |||
Current offering period | 6 months | |||
Stock-based compensation expense, net of tax | $ 416,000,000 | $ 400,000,000 | $ 286,000,000 | |
Employee Stock Purchase Plan | ||||
Share-based compensation | ||||
Common stock, authorized (shares) | 80,000,000 | |||
Maximum contribution limit as percentage of base compensation (as a percent) | 10.00% | 10.00% | ||
Stock purchase price as a percentage of the fair market value on the purchase date | 95.00% | 95.00% | ||
Stock-based compensation expense, net of tax | $ 0 | $ 0 | ||
Stock Options | ||||
Share-based compensation | ||||
Unrecognized pre-tax stock-based compensation expense | $ 58,000,000 |
Taxes on Earnings (Details)
Taxes on Earnings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Domestic and foreign components of earnings (loss) before taxes | |||
U.S. | $ (368) | $ 192 | $ 878 |
Non-U.S. | 4,447 | 1,278 | 1,366 |
Earnings before taxes | 4,079 | 1,470 | 2,244 |
U.S. federal taxes: | |||
Current | 1,133 | 1,647 | 481 |
Deferred | (1,162) | (3,508) | (460) |
Non-U.S. taxes: | |||
Current | 1,085 | 492 | 375 |
Deferred | 35 | 527 | 197 |
State taxes: | |||
Current | 72 | 47 | 45 |
Deferred | (245) | (196) | (42) |
Provision for (benefit from) taxes on earnings | $ 918 | $ (991) | $ 596 |
Taxes on Earnings (Detail 2)
Taxes on Earnings (Detail 2) | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Differences between the U.S. federal statutory income tax rate and HP's effective tax rate | |||
U.S. federal statutory income tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | (0.40%) | 14.10% | 2.40% |
Lower rates in other jurisdictions, net | (26.80%) | (53.60%) | (9.60%) |
Valuation allowance | (5.80%) | (75.70%) | 3.20% |
Uncertain tax positions | 23.70% | 5.80% | (0.70%) |
Other, net | (3.20%) | 7.00% | (3.70%) |
Effective tax rate (as a percent) | 22.50% | (67.40%) | 26.60% |
Taxes on Earnings (Detail 3)
Taxes on Earnings (Detail 3) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefits related to items unique to the year | $ (249) | $ 1,600 | $ 113 |
Income tax charges related to tax indemnification | 714 | ||
Settlement of pre-separation liabilities | 647 | ||
Income tax charges related to gain on sale of business | 169 | ||
Income tax benefits related to acquisition, separation, divestiture | 270 | ||
Income tax benefits on restructuring | 212 | ||
Income tax benefits on sale | 124 | ||
Income tax benefits related to valuation allowances | 1,800 | ||
Income tax benefits related to restructuring and separation related costs | 447 | ||
Income tax benefits for adjustments to uncertain tax positions | 131 | ||
Tax charges to record valuation allowances on certain foreign deferred tax assets | 486 | ||
Income tax charges related to state tax impacts | 217 | ||
Tax benefit associated with miscellaneous prior period adjustments | 66 | ||
Tax benefit recorded for increases to foreign and state valuation allowances | 35 | ||
Income tax benefits, reduced rates for subsidiaries in certain countries | $ 401 | $ 260 | $ 546 |
Income tax benefits, reduced rates for subsidiaries in certain countries (in dollars per share) | $ 0.23 | $ 0.14 | $ 0.30 |
Taxes on Earnings (Detail 4)
Taxes on Earnings (Detail 4) $ in Millions | 12 Months Ended | 60 Months Ended | ||
Oct. 31, 2016USD ($)item | Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | Dec. 31, 2009USD ($) | |
Reconciliation of unrecognized tax benefits | ||||
Balance at beginning of year | $ 4,901 | $ 2,067 | $ 1,925 | |
Increases: | ||||
For current year's tax positions | 1,481 | 1,449 | 273 | |
For prior years' tax positions | 863 | 3,591 | 533 | |
Net transfers from former Parent through equity | 4,540 | 0 | 0 | |
Decreases: | ||||
For prior years' tax positions | (115) | (554) | (328) | |
Statute of limitations expiration | (47) | (12) | (121) | |
Settlements with taxing authorities | (73) | (54) | (215) | |
Net transfers to former Parent through equity | 0 | (1,586) | 0 | |
Balance at end of year | 11,550 | 4,901 | 2,067 | |
Unrecognized tax benefits that would affect effective tax rate if realized | 3,100 | 600 | $ 1,400 | |
Increase in unrecognized tax benefit related to the timing of intercompany royalty income recognition | 6,600 | |||
Increase in unrecognized tax benefits | 2,800 | |||
Accrued income tax for interest and penalties | $ 423 | $ 269 | ||
Likelihood of no resolution period | 12 months | |||
Likelihood of conclusion period for certain federal, foreign and state tax issues | 12 months | |||
Reasonably possible decrease in existing unrecognized tax benefits within the next 12 months | $ 2,500 | |||
Number of other countries in which HP is subject to income taxes | item | 110 | |||
Income tax examination, additional tax payable | $ 336 | |||
Income tax examination, proposed assessment amount | $ 743 | |||
Undistributed earnings from non-U.S. operations | $ 26,200 |
Taxes on Earnings (Detail 5)
Taxes on Earnings (Detail 5) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
Deferred Tax Assets | ||
Loss and credit carryforwards | $ 1,859 | $ 1,706 |
Inventory valuation | 94 | 97 |
Intercompany transactions—royalty prepayments | 5,237 | 5,598 |
Intercompany transactions—excluding royalty prepayments | 160 | 190 |
Fixed assets | 128 | 327 |
Warranty | 164 | 171 |
Employee and retiree benefits | 1,655 | 772 |
Accounts receivable allowance | 32 | 38 |
Intangible assets | 53 | 0 |
Restructuring | 258 | 210 |
Deferred revenue | 968 | 1,152 |
Other | 436 | 241 |
Gross deferred tax assets and liabilities | 11,044 | 10,502 |
Valuation allowance | (2,650) | (2,252) |
Net deferred tax assets and liabilities | 8,394 | 8,250 |
Deferred Tax Liabilities | ||
Loss and credit carryforwards | (26) | 0 |
Unremitted earnings of foreign subsidiaries | (3,708) | (3,362) |
Inventory valuation | (1) | (24) |
Intercompany transactions—royalty prepayments | 0 | 0 |
Intercompany transactions—excluding royalty prepayments | 0 | (14) |
Fixed assets | (128) | (362) |
Warranty | 0 | (2) |
Employee and retiree benefits | (65) | (48) |
Accounts receivable allowance | 0 | (9) |
Intangible assets | (176) | (349) |
Deferred revenue | (3) | (196) |
Other | 0 | 0 |
Gross deferred tax assets and liabilities | (4,107) | (4,366) |
Net deferred tax assets and liabilities | $ (4,107) | $ (4,366) |
Taxes on Earnings (Details 6)
Taxes on Earnings (Details 6) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Current and long term deferred tax assets and liabilities | ||
Deferred tax assets | $ 4,430 | $ 3,925 |
Deferred tax liabilities | (143) | (41) |
Deferred tax assets net of deferred tax liabilities | 4,287 | 3,884 |
Advance royalty proceeds received from multi-year intercompany licensing arrangements | $ 3,700 | $ 5,000 |
Royalty recognition term | 5 years | |
Federal | ||
Operating loss carryforwards | ||
Operating loss carryforwards | $ 51 | |
State | ||
Operating loss carryforwards | ||
Operating loss carryforwards | 1,900 | |
Foreign | ||
Operating loss carryforwards | ||
Operating loss carryforwards | $ 6,000 |
Taxes on Earnings (Detail 7)
Taxes on Earnings (Detail 7) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
Valuation allowance | ||
Valuation allowance for deferred tax assets | $ 2,650 | $ 2,252 |
Operating loss carryforwards | State | ||
Valuation allowance | ||
Valuation allowance for deferred tax assets | 38 | |
Operating loss carryforwards | Foreign | ||
Valuation allowance | ||
Valuation allowance for deferred tax assets | $ 1,200 |
Taxes on Earnings (Detail 8)
Taxes on Earnings (Detail 8) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Carryforward | |||
U.S. foreign tax credits | $ 291 | ||
U.S. research and development and other credits | 99 | ||
Tax credits in state and foreign jurisdictions | 205 | ||
Balance at end of year | 595 | ||
Valuation Allowance | |||
Tax credits in state and foreign jurisdictions | (160) | ||
Balance at end of year | (160) | ||
Valuation allowance balance | |||
Balance at beginning of year | 2,252 | ||
(Provision) benefit for taxes | (918) | $ 991 | $ (596) |
Balance at end of year | 2,650 | 2,252 | |
Increase (decrease) in valuation allowances | 398 | 1,700 | |
Deferred tax asset valuation allowance | |||
Valuation allowance balance | |||
Balance at beginning of year | 2,252 | 3,912 | 3,194 |
(Provision) benefit for taxes | (235) | (1,155) | 198 |
Other comprehensive income, currency translation and charges to other accounts | 633 | (505) | 520 |
Balance at end of year | $ 2,650 | $ 2,252 | $ 3,912 |
Balance Sheet Details (Detail)
Balance Sheet Details (Detail) - USD ($) $ in Millions | 12 Months Ended | ||||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2016 | Oct. 31, 2015 | |
Accounts Receivable, Net | |||||
Unbilled receivable | $ 1,086 | $ 1,396 | |||
Accounts receivable | 5,907 | 7,251 | |||
Allowance for doubtful accounts | $ (109) | $ (126) | $ (150) | (84) | (109) |
Accounts receivable, net | 6,909 | 8,538 | |||
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||||
Balance at beginning of year | 109 | 126 | 150 | ||
Provision for doubtful accounts | 52 | 27 | 50 | ||
Deductions, net of recoveries | (77) | (44) | (74) | ||
Balance at end of year | 84 | 109 | 126 | ||
Trade receivables sold and cash received | |||||
Balance at beginning of period | 68 | 188 | 70 | ||
Trade receivables sold | 3,015 | 4,221 | 3,947 | ||
Cash receipts | (2,931) | (4,327) | (3,815) | ||
Foreign currency and other | (7) | (14) | (14) | ||
Balance at end of period | $ 145 | $ 68 | $ 188 | ||
Inventory | |||||
Finished goods | 1,202 | 1,518 | |||
Purchased parts and fabricated assemblies | 572 | 680 | |||
Inventory, net | 1,774 | 2,198 | |||
Other Current Assets | |||||
Value-added taxes receivable | 1,060 | 1,538 | |||
Manufacturer and other receivables | 1,057 | 1,992 | |||
Prepaid and other current assets | 2,207 | 2,938 | |||
Other current assets, total | 4,324 | 6,468 | |||
Long-Term Financing Receivables and Other Assets | |||||
Financing receivables, net | 3,938 | 3,642 | |||
Deferred tax assets—long-term | 4,430 | 3,925 | |||
Deferred costs—long-term | 822 | 715 | |||
Other | 4,026 | 2,593 | |||
Long-Term Financing Receivables and Other Assets, total | 13,216 | 10,875 | |||
Other Accrued Liabilities | |||||
Accrued taxes—other | 1,297 | 1,364 | |||
Warranty | 258 | 276 | |||
Sales and marketing programs | 858 | 908 | |||
Other | 2,578 | 3,766 | |||
Other Accrued Liabilities, total | 4,991 | 6,314 | |||
Other Liabilities | |||||
Pension, post-retirement, and post-employment liabilities | 4,230 | 3,432 | |||
Deferred revenue—long-term | 3,408 | 3,565 | |||
Deferred tax liability—long-term | 143 | 41 | |||
Tax liability—long-term | 4,057 | 778 | |||
Other long-term liabilities | 1,184 | 1,086 | |||
Other Liabilities, total | 13,022 | $ 8,902 | |||
H3C | |||||
Inventory | |||||
Inventory, net | $ 200 |
Balance Sheet Details (Details
Balance Sheet Details (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Property, Plant and Equipment, Net | |||
Property, plant and equipment, gross | $ 21,745 | $ 21,424 | |
Accumulated depreciation | (12,109) | (11,538) | |
Property, plant and equipment, net | 9,636 | 9,886 | |
Depreciation expense | 3,000 | 3,100 | $ 3,200 |
Investment in property, plant and equipment | 3,400 | ||
Sale and retirement of gross property, plant and equipment | 2,800 | ||
Unfavorable currency impacts on gross property plant and equipment | 114 | ||
Accumulated depreciation on sale and retirement of property, plant and equipment | 2,300 | ||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | H3C | |||
Property, Plant and Equipment, Net | |||
Divestiture of property, plant and equipment | 251 | ||
Land | |||
Property, Plant and Equipment, Net | |||
Property, plant and equipment, gross | 497 | 514 | |
Buildings and leasehold improvements | |||
Property, Plant and Equipment, Net | |||
Property, plant and equipment, gross | 6,948 | 6,924 | |
Machinery and equipment, including equipment held for lease | |||
Property, Plant and Equipment, Net | |||
Property, plant and equipment, gross | $ 14,300 | $ 13,986 |
Financing Receivables and Ope77
Financing Receivables and Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Leases [Abstract] | ||||
Financing receivable term, low end of range | 2 years | |||
Financing receivable term, high end of range | 5 years | |||
Minimum lease payments receivable | $ 7,293 | $ 6,941 | ||
Unguaranteed residual value | 231 | 217 | ||
Unearned income | (574) | (503) | ||
Financing receivables, gross | 6,950 | 6,655 | ||
Allowance for doubtful accounts | (89) | (95) | $ (111) | $ (131) |
Financing receivables, net | 6,861 | 6,560 | ||
Less: current portion | (2,923) | (2,918) | ||
Amounts due after one year, net | 3,938 | 3,642 | ||
Scheduled maturities of minimum lease payments receivable: | ||||
2,017 | 3,187 | |||
2,018 | 1,952 | |||
2,019 | 1,263 | |||
2,020 | 595 | |||
2,021 | 234 | |||
Thereafter | 62 | |||
Total | $ 7,293 | $ 6,941 |
Financing Receivables and Ope78
Financing Receivables and Operating Leases (Detail 2) - USD ($) $ in Millions | 12 Months Ended | ||||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2016 | Oct. 31, 2015 | |
Gross financing receivables | |||||
Financing receivables, gross | $ 6,950 | $ 6,655 | |||
Aging and non-accrual status of gross financing receivables | |||||
Unbilled sales-type and direct-financing lease receivables | 6,495 | 6,174 | |||
Gross financing receivables on non-accrual status | 163 | 154 | |||
Gross financing receivables 90 days past due and still accruing interest | 120 | 102 | |||
Period past due, after which a write-off or specific reserve is created | 180 days | ||||
Allowance for doubtful accounts | |||||
Balance at beginning of year | $ 95 | $ 111 | $ 131 | ||
Provision for doubtful accounts | 11 | 25 | 30 | ||
Deductions, net of recoveries | (17) | (41) | (50) | ||
Balance at end of year | 89 | 95 | 111 | ||
Gross financing receivables collectively evaluated for loss | 6,667 | 6,399 | |||
Gross financing receivables individually evaluated for loss | 283 | 256 | |||
Financing receivables, gross | 6,950 | 6,655 | |||
Allowance for financing receivables collectively evaluated for loss | 73 | 82 | |||
Allowance for financing receivables individually evaluated for loss | 16 | 13 | |||
Total | $ 95 | $ 111 | $ 131 | 89 | 95 |
Period past due, after which account is put on non-accrual status | 90 days | ||||
Operating lease assets | |||||
Equipment leased to customers | 5,467 | 4,428 | |||
Accumulated depreciation | (2,134) | (1,513) | |||
Operating lease assets, net | 3,333 | 2,915 | |||
Minimum future rentals on non-cancelable operating leases: | |||||
2,017 | 1,505 | ||||
2,018 | 971 | ||||
2,019 | 460 | ||||
2,020 | 98 | ||||
2,021 | 17 | ||||
Thereafter | 2 | ||||
Total | 3,053 | ||||
Low | |||||
Gross financing receivables | |||||
Financing receivables, gross | 3,484 | 3,467 | |||
Allowance for doubtful accounts | |||||
Financing receivables, gross | 3,484 | 3,467 | |||
Moderate | |||||
Gross financing receivables | |||||
Financing receivables, gross | 3,382 | 3,115 | |||
Allowance for doubtful accounts | |||||
Financing receivables, gross | 3,382 | 3,115 | |||
High | |||||
Gross financing receivables | |||||
Financing receivables, gross | 84 | 73 | |||
Allowance for doubtful accounts | |||||
Financing receivables, gross | 84 | 73 | |||
Current 1-30 days | |||||
Aging and non-accrual status of gross financing receivables | |||||
Past due | 337 | 358 | |||
Past due 31-60 days | |||||
Aging and non-accrual status of gross financing receivables | |||||
Past due | 47 | 52 | |||
Past due 61-90 days | |||||
Aging and non-accrual status of gross financing receivables | |||||
Past due | 12 | 14 | |||
Past due 90 days | |||||
Aging and non-accrual status of gross financing receivables | |||||
Past due | $ 59 | $ 57 |
Acquisitions and Divestitures79
Acquisitions and Divestitures (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Aug. 31, 2016USD ($)$ / shares | May 31, 2016USD ($) | Apr. 30, 2016USD ($) | Apr. 30, 2016USD ($)₨ / shares | May 31, 2015USD ($) | Oct. 31, 2016USD ($) | Jul. 31, 2016 | Oct. 31, 2016USD ($)itembusiness_acquired | Oct. 31, 2015USD ($)item | Oct. 31, 2014USD ($)business_acquired | |
Divestitures | ||||||||||
Number of divestitures | item | 4 | |||||||||
Proceeds from business divestitures | $ 3,342 | $ 140 | $ 6 | |||||||
Gain on disposal | 2,420 | 0 | 0 | |||||||
Entity ownership of HP China businesses (as a percent) | 49.00% | |||||||||
Gain on divestiture | $ 2,420 | 0 | $ 0 | |||||||
Acquisitions | ||||||||||
Number of acquisitions | business_acquired | 2 | 2 | ||||||||
Goodwill | $ 12 | |||||||||
Total fair value of consideration | 55 | |||||||||
Goodwill | $ 24,178 | $ 24,178 | $ 27,261 | 25,960 | ||||||
Intangible assets | 25 | |||||||||
Trilead Ag | ||||||||||
Acquisitions | ||||||||||
Goodwill | 12 | 12 | ||||||||
Intangible assets | $ 11 | 11 | ||||||||
SGI | ||||||||||
Acquisitions | ||||||||||
Acquisition price ($ per share) | $ / shares | $ 7.75 | |||||||||
Total fair value of consideration | $ 275 | |||||||||
Acquisitions | ||||||||||
Acquisitions | ||||||||||
Number of acquisitions | item | 5 | |||||||||
Aggregate purchase price allocation | ||||||||||
Acquisitions | ||||||||||
Total fair value of consideration | $ 3,071 | |||||||||
Goodwill | 1,987 | |||||||||
Intangible assets | 704 | |||||||||
Aggregate purchase price allocation | In-process research and development | ||||||||||
Acquisitions | ||||||||||
Intangible assets | 159 | |||||||||
Aruba | ||||||||||
Acquisitions | ||||||||||
Total fair value of consideration | $ 2,800 | |||||||||
Goodwill | 1,800 | |||||||||
Intangible assets | $ 643 | |||||||||
Weighted-average useful life | 6 years | |||||||||
Aruba | In-process research and development | ||||||||||
Acquisitions | ||||||||||
Intangible assets | $ 153 | |||||||||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | H3C | ||||||||||
Divestitures | ||||||||||
Earnings | $ 182 | $ 286 | $ 406 | |||||||
Ownership | 49.00% | 49.00% | ||||||||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | H3C | HP China businesses | ||||||||||
Divestitures | ||||||||||
Entity ownership of HP China businesses (as a percent) | 100.00% | |||||||||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | Tsinghua Holdings Subsidiary | H3C | ||||||||||
Divestitures | ||||||||||
Consideration received | $ 2,600 | |||||||||
Interest acquired (as a percent) | 51.00% | |||||||||
Gain on disposal | $ 2,200 | |||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | MphasiS | MphasiS | ||||||||||
Divestitures | ||||||||||
Proceeds (INR per share) | ₨ / shares | ₨ 430 | |||||||||
Disposed of by sale | Disposal Groups Closed During First Half Fy2016 | ||||||||||
Divestitures | ||||||||||
Number of divestitures | item | 5 | |||||||||
Consideration received | $ 3,400 | $ 3,400 | ||||||||
Proceeds from business divestitures | $ 25 | |||||||||
Disposed of by sale | MphasiS | MphasiS | ||||||||||
Divestitures | ||||||||||
Consideration received | $ 824 | ₨ 824 | ||||||||
Gain on divestiture | $ 253 | |||||||||
Enterprise Group | ||||||||||
Acquisitions | ||||||||||
Adjustments | $ 260 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Table (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2016 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 27,261 | $ 25,960 | $ 24,178 |
Intangible assets | 25 | ||
Total fair value of consideration | $ 55 | ||
Undefined | |||
Business Acquisition [Line Items] | |||
Goodwill | 1,987 | ||
Intangible assets | 704 | ||
Net assets assumed | 221 | ||
Total fair value of consideration | 3,071 | ||
In-process research and development | Undefined | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 159 |
Goodwill and Intangible Asset81
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Goodwill | |||
Balance at beginning of period | $ 27,261 | $ 25,960 | |
Goodwill acquired during the period | 12 | 1,987 | |
Goodwill, divested during the period | (3,324) | (123) | |
Changes due to foreign currency | (31) | (57) | |
Goodwill adjustments | 260 | (506) | |
Balance at end of period | 24,178 | 27,261 | |
Accumulated impairment losses | $ 13,700 | ||
Enterprise Group | |||
Goodwill | |||
Balance at beginning of period | 18,712 | 16,867 | |
Goodwill acquired during the period | 2 | 1,891 | |
Goodwill, divested during the period | (3,000) | 0 | |
Changes due to foreign currency | (29) | (52) | |
Goodwill adjustments | 260 | 6 | |
Balance at end of period | 15,945 | 18,712 | |
Enterprise Services | |||
Goodwill | |||
Balance at beginning of period | 92 | 97 | |
Goodwill acquired during the period | 0 | 0 | |
Goodwill, divested during the period | (90) | 0 | |
Changes due to foreign currency | (2) | (5) | |
Goodwill adjustments | 0 | 0 | |
Balance at end of period | 0 | 92 | |
Accumulated impairment losses | 8,000 | ||
Software | |||
Goodwill | |||
Balance at beginning of period | 8,313 | 8,852 | |
Goodwill acquired during the period | 10 | 96 | |
Goodwill, divested during the period | (234) | (123) | |
Changes due to foreign currency | 0 | 0 | |
Goodwill adjustments | 0 | (512) | |
Balance at end of period | 8,089 | 8,313 | |
Accumulated impairment losses | $ 5,700 | ||
Financial Services | |||
Goodwill | |||
Balance at beginning of period | 144 | 144 | |
Goodwill acquired during the period | 0 | 0 | |
Goodwill, divested during the period | 0 | 0 | |
Changes due to foreign currency | 0 | 0 | |
Goodwill adjustments | 0 | 0 | |
Balance at end of period | $ 144 | $ 144 |
Goodwill and Intangible Asset82
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Intangible assets | |||
Intangible assets, gross | $ 5,762 | $ 9,717 | |
Amortizable intangible assets, accumulated amortization | (1,575) | (4,684) | |
Finite-lived Intangible Assets, Accumulated Impairment Losses | (3,103) | (3,103) | |
Total Intangible Assets- Net | 1,084 | 1,930 | |
Amortizable intangible assets, net | 1,084 | ||
Amount of fully amortized intangible assets | 3,500 | 703 | |
Divested | 478 | ||
Divested accumulated amortization | 379 | ||
Purchases | 260 | (506) | |
Amortization of intangible assets | 755 | 852 | $ 906 |
Trilead Ag | |||
Intangible assets | |||
Purchases | 11 | ||
In-process research and development | |||
Intangible assets | |||
Amortizable intangible assets, gross | 0 | 159 | |
Amortizable intangible assets, net | 0 | 159 | |
Customer contracts, customer lists and distribution agreements | |||
Intangible assets | |||
Amortizable intangible assets, gross | 1,394 | 5,109 | |
Amortizable intangible assets, accumulated amortization | (322) | (3,517) | |
Finite-lived Intangible Assets, Accumulated Impairment Losses | (856) | (856) | |
Amortizable intangible assets, net | $ 216 | 736 | |
Weighted-Average Remaining Useful Lives | 5 years | ||
Developed and core technology and patents | |||
Intangible assets | |||
Amortizable intangible assets, gross | $ 4,190 | 4,218 | |
Amortizable intangible assets, accumulated amortization | (1,232) | (1,110) | |
Finite-lived Intangible Assets, Accumulated Impairment Losses | (2,138) | (2,138) | |
Amortizable intangible assets, net | $ 820 | 970 | |
Weighted-Average Remaining Useful Lives | 5 years | ||
Developed and core technology and patents | In-process research and development | |||
Intangible assets | |||
Reclassified | $ 159 | ||
Trade name and trade marks | |||
Intangible assets | |||
Amortizable intangible assets, gross | 178 | 231 | |
Amortizable intangible assets, accumulated amortization | (21) | (57) | |
Finite-lived Intangible Assets, Accumulated Impairment Losses | (109) | (109) | |
Amortizable intangible assets, net | $ 48 | $ 65 | |
Weighted-Average Remaining Useful Lives | 7 years |
Goodwill and Intangible Asset83
Goodwill and Intangible Assets (Details 3) $ in Millions | Oct. 31, 2016USD ($) |
Estimated future amortization expense related to finite-lived purchased intangible assets | |
2,017 | $ 339 |
2,018 | 248 |
2,019 | 202 |
2,020 | 172 |
2,021 | 55 |
Thereafter | 68 |
Total | $ 1,084 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Fair Value and Carrying Value of Debt | |||
Transfers | $ 41 | ||
Fair value, short- and long-term debt | $ 16,300 | ||
Carrying value, short- and long-term debt | 16,100 | 15,800 | |
Impairment of long-lived assets held-for-use | 0 | 136 | $ 0 |
Fair Value, Measurements, Recurring | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 11,742 | 8,536 | |
Total liabilities | 228 | 192 | |
Fair Value, Measurements, Recurring | Time deposits | MphasiS | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 74 | ||
Fair Value, Measurements, Recurring | Time deposits | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 4,085 | 2,473 | |
Fair Value, Measurements, Recurring | Money market funds | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 6,549 | 4,592 | |
Fair Value, Measurements, Recurring | Mutual funds | MphasiS | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 332 | ||
Fair Value, Measurements, Recurring | Mutual funds | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 0 | 246 | |
Fair Value, Measurements, Recurring | Equity-related investments | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 17 | 53 | |
Fair Value, Measurements, Recurring | Foreign bonds | MphasiS | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 37 | ||
Fair Value, Measurements, Recurring | Foreign bonds | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 287 | 313 | |
Fair Value, Measurements, Recurring | Other debt securities | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 35 | 40 | |
Fair Value, Measurements, Recurring | Interest rate contracts | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 109 | 0 | |
Fair Value, Measurements, Recurring | Interest rate contracts | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total liabilities | 6 | 55 | |
Fair Value, Measurements, Recurring | Foreign currency contracts | MphasiS | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 9 | ||
Fair Value, Measurements, Recurring | Foreign currency contracts | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 660 | 816 | |
Total liabilities | 220 | 137 | |
Fair Value, Measurements, Recurring | Other derivatives | Fair Value | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 0 | 3 | |
Total liabilities | 2 | 0 | |
Fair Value, Measurements, Recurring | Level 1 | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 6,574 | 4,646 | |
Fair Value, Measurements, Recurring | Level 1 | Money market funds | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 6,549 | 4,592 | |
Fair Value, Measurements, Recurring | Level 1 | Equity-related investments | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 17 | 46 | |
Fair Value, Measurements, Recurring | Level 1 | Foreign bonds | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 8 | 8 | |
Fair Value, Measurements, Recurring | Level 2 | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 5,133 | 3,850 | |
Total liabilities | 228 | 192 | |
Fair Value, Measurements, Recurring | Level 2 | Time deposits | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 4,085 | 2,473 | |
Fair Value, Measurements, Recurring | Level 2 | Mutual funds | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 0 | 246 | |
Fair Value, Measurements, Recurring | Level 2 | Equity-related investments | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 0 | 7 | |
Fair Value, Measurements, Recurring | Level 2 | Foreign bonds | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 279 | 305 | |
Fair Value, Measurements, Recurring | Level 2 | Interest rate contracts | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 109 | 0 | |
Total liabilities | 6 | 55 | |
Fair Value, Measurements, Recurring | Level 2 | Foreign currency contracts | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 660 | 816 | |
Total liabilities | 220 | 137 | |
Fair Value, Measurements, Recurring | Level 2 | Other derivatives | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 0 | 3 | |
Total liabilities | 2 | 0 | |
Fair Value, Measurements, Recurring | Level 3 | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | 35 | 40 | |
Fair Value, Measurements, Recurring | Level 3 | Other debt securities | |||
Financial assets and liabilities measured at fair value on a recurring basis | |||
Total assets | $ 35 | $ 40 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Gains | $ 69 | $ 76 | |
Available-for-sale securities, Gross Unrealized Losses | (16) | (22) | |
Interest income | 122 | 54 | $ 64 |
Debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Gains | 69 | 69 | |
Available-for-sale securities, Gross Unrealized Losses | (12) | (13) | |
Gross unrealized loss of debt security in a continuous loss position for more than 12 months | 12 | 13 | |
Foreign bonds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Gains | 69 | 69 | |
Other debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Losses | (12) | (13) | |
Equity-related investments | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Gains | 0 | 7 | |
Available-for-sale securities, Gross Unrealized Losses | (4) | (9) | |
Public equity securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Gross Unrealized Gains | 0 | 7 | |
Available-for-sale securities, Gross Unrealized Losses | (4) | (9) | |
Cost | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 10,623 | 7,132 | |
Available-for-sale securities, Cost | 297 | 531 | |
Total cash equivalents and available-for-sale investments | 10,920 | 7,663 | |
Cost | Debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 276 | 403 | |
Cost | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 11 | 106 | |
Cost | Foreign bonds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 218 | 244 | |
Cost | Other debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 47 | 53 | |
Cost | Equity-related investments | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 21 | 128 | |
Cost | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 0 | 73 | |
Cost | Public equity securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 21 | 55 | |
Cost | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 4,074 | 2,367 | |
Cost | Money market funds | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 6,549 | 4,592 | |
Cost | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 0 | 173 | |
Fair Value | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 10,623 | 7,132 | |
Available-for-sale securities, Estimated Fair Value | 350 | 585 | |
Total cash equivalents and available-for-sale investments | 10,973 | 7,717 | |
Fair Value | Debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 333 | 459 | |
Fair Value | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 11 | 106 | |
Fair Value | Foreign bonds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 287 | 313 | |
Fair Value | Other debt securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 35 | 40 | |
Fair Value | Equity-related investments | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 17 | 126 | |
Fair Value | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 0 | 73 | |
Fair Value | Public equity securities | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Estimated Fair Value | 17 | 53 | |
Fair Value | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 4,074 | 2,367 | |
Fair Value | Money market funds | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 6,549 | 4,592 | |
Fair Value | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 0 | $ 173 | |
MphasiS | Cost | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 41 | ||
MphasiS | Cost | Foreign bonds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 37 | ||
MphasiS | Cost | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Available-for-sale securities, Cost | 118 | ||
MphasiS | Cost | Time deposits | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | 33 | ||
MphasiS | Cost | Mutual funds | |||
Cash equivalents and available-for-sale investments | |||
Cash equivalents | $ 214 |
Financial Instruments (Details
Financial Instruments (Details 2) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Amortized Cost | ||
Due in more than five years | $ 276 | |
Total | 276 | |
Fair Value | ||
Due in more than five years | 333 | |
Total | 333 | |
Investment Holdings | ||
Impairment | 30 | |
Investment in equity interests | 2,648 | $ 0 |
Equity securities in privately held companies | Long-Term Financing Receivables and Other Assets | ||
Investment Holdings | ||
Investment amount | $ 128 | $ 45 |
Financial Instruments (Details
Financial Instruments (Details 3) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Investments, All Other Investments [Abstract] | ||
Period within which the funds held as collateral and posted as collateral are transferred from or to counterparties | 2 days | |
Collateralized arrangements in net liability position | $ 9 | $ 35 |
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 35,300 | 29,463 |
Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 449 | 459 |
Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 320 | 360 |
Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 168 | 85 |
Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 60 | 107 |
Cash flow hedges | ||
Derivatives, Fair Value | ||
Maturity period of foreign currency cash flow hedges | 12 months | |
Cash flow hedges | Minimum | ||
Derivatives, Fair Value | ||
Duration of lease term for which lease-related forward contracts and intercompany lease loan forward contracts can be extended | 2 years | |
Cash flow hedges | Maximum | ||
Derivatives, Fair Value | ||
Duration of lease term for which lease-related forward contracts and intercompany lease loan forward contracts can be extended | 5 years | |
Derivatives designated as hedging instruments | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | $ 18,646 | 20,053 |
Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 349 | 410 |
Derivatives designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 309 | 272 |
Derivatives designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 63 | 35 |
Derivatives designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 49 | 67 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 9,500 | 9,500 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 109 | 0 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 6 | 55 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 7,255 | 8,692 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 296 | 296 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 172 | 206 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 40 | 28 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign currency contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 15 | 8 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign currency contracts | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 1,891 | 1,861 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 53 | 114 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign currency contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 28 | 66 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign currency contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 23 | 7 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign currency contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 28 | 4 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 16,654 | 9,410 |
Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 100 | 49 |
Derivatives not designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 11 | 88 |
Derivatives not designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 105 | 50 |
Derivatives not designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 11 | 40 |
Derivatives not designated as hedging instruments | Foreign currency contracts | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 16,496 | 9,283 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 100 | 46 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 11 | 88 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 103 | 50 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 11 | 40 |
Derivatives not designated as hedging instruments | Other derivatives | ||
Derivatives, Fair Value | ||
Total derivatives, gross notional amount | 158 | 127 |
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 3 |
Derivatives not designated as hedging instruments | Other derivatives | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 2 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 0 | $ 0 |
Financial Instruments (Detail88
Financial Instruments (Details 4) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Derivative assets | ||
Gross Amount Recognized | $ 769 | $ 819 |
Net Amount Presented | 769 | 819 |
Gross Amounts Not Offset | ||
Derivatives | 214 | 153 |
Financial Collateral | 465 | 631 |
Net Amount | 90 | 35 |
Derivative liabilities | ||
Gross Amount Recognized | 228 | 192 |
Net Amount Presented | 228 | 192 |
Gross Amounts Not Offset | ||
Derivatives | 214 | 153 |
Financial Collateral | 10 | 19 |
Net Amount | $ 4 | $ 20 |
Period within which the funds held as collateral and posted as collateral are transferred from or to counterparties | 2 days |
Financial Instruments (Detail 5
Financial Instruments (Detail 5) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Net revenue | $ 50,123 | $ 52,107 | $ 55,123 |
Cost of products | (45,973) | (50,584) | (52,788) |
Gain on divestiture | 2,420 | 0 | 0 |
Interest and other, net | (312) | (51) | (91) |
Earnings before taxes | 4,079 | 1,470 | 2,244 |
Portion of the hedging instruments gain or loss excluded from the assessment of effectiveness for fair value, cash flow or net investment hedges | 0 | 0 | 0 |
Pre-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Earnings | |||
Gains (Losses) Recognized in Income on Derivatives | (430) | 12 | 169 |
Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion) | Reclassifications of losses (gains) into earnings | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Net revenue | 19 | 276 | (4) |
Cost of products | 0 | 6 | 3 |
Other operating expenses | 0 | (4) | (9) |
Gain on divestiture | 8 | 0 | 0 |
Interest and other, net | 243 | 202 | (50) |
Earnings before taxes | 270 | 480 | (60) |
Interest rate contracts | |||
Pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship | |||
(Losses) Gains Recognized in Income on Derivative | 158 | (55) | 0 |
(Losses) Gains recognized in Income on Related Hedged Item | (158) | 55 | 0 |
Foreign currency contracts | |||
Pre-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Earnings | |||
Gains (Losses) Recognized in Income on Derivatives | (425) | 11 | 169 |
Other derivatives | |||
Pre-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Earnings | |||
Gains (Losses) Recognized in Income on Derivatives | (5) | 1 | 0 |
Cash flow hedges | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | 226 | 481 | 111 |
Gain expected to be reclassified from Accumulated OCI into earnings in next 12 months | (40) | ||
Cash flow hedges | Foreign currency contracts | Net revenue | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | (16) | 279 | 149 |
Cash flow hedges | Foreign currency contracts | Cost of products | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | 6 | (3) | 13 |
Cash flow hedges | Foreign currency contracts | Other operating expenses | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | 0 | (2) | 9 |
Cash flow hedges | Foreign currency contracts | Interest and other, net | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | 236 | 207 | (60) |
Net investment hedges | Foreign currency contracts | |||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | |||
Gains (Losses) Recognized in OCI on Derivatives (Effective Portion) | $ (58) | $ 228 | $ 57 |
Borrowings (Details)
Borrowings (Details) - USD ($) $ in Millions | Oct. 31, 2016 | Oct. 31, 2015 |
Notes Payable and Short-Term Borrowings | ||
Current portion of long-term debt | $ 2,776 | $ 161 |
Amount Outstanding | $ 3,532 | $ 691 |
Current portion of long-term debt, weighted average interest rate (as a percent) | 1.70% | 2.60% |
FS Commercial paper | ||
Notes Payable and Short-Term Borrowings | ||
Amount Outstanding | $ 326 | $ 39 |
Weighted-Average Interest Rate | 0.10% | 0.20% |
Notes payable to banks, lines of credit and other(1) | ||
Notes Payable and Short-Term Borrowings | ||
Amount Outstanding | $ 430 | $ 491 |
Weighted-Average Interest Rate | 2.00% | 2.70% |
Notes payable to banks, lines of credit and other(1) | Financial Services | ||
Notes Payable and Short-Term Borrowings | ||
Short term borrowings | $ 381 | $ 374 |
Borrowings (Details 2)
Borrowings (Details 2) - USD ($) | 12 Months Ended | |||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 09, 2015 | |
Long-term debt | ||||
Total long-term debt | $ 12,608,000,000 | $ 15,103,000,000 | ||
Fair value adjustment related to hedged debt | 103,000,000 | (55,000,000) | ||
Less: current portion | (2,776,000,000) | (161,000,000) | ||
Interest expense on borrowings recognized in Combined Statements of Earnings | ||||
Financing interest | 249,000,000 | 240,000,000 | $ 277,000,000 | |
Interest expense | 328,000,000 | 29,000,000 | 45,000,000 | |
Total interest expense | 577,000,000 | 269,000,000 | $ 322,000,000 | |
Fixed rate notes | $ 14,000,000,000 | |||
Floating rate notes | $ 600,000,000 | |||
$2,250 issued at discount to par at a price of 99.944% in October 2015 at 2.45%, due October 5, 2017, interest payable semi-annually on April 5 and October 5 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 2,249,000,000 | $ 2,249,000,000 | ||
Discount to par (as a percent) | 99.944% | 99.944% | ||
Interest rate (as a percent) | 2.45% | 2.45% | ||
Face amount of debt instrument | $ 2,250,000,000 | $ 2,250,000,000 | ||
$2,650 issued at discount to par at a price of 99.872% in October 2015 at 2.85%, due October 5, 2018, interest payable semi-annually on April 5 and October 5 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 2,648,000,000 | $ 2,647,000,000 | ||
Discount to par (as a percent) | 99.872% | 99.872% | ||
Interest rate (as a percent) | 2.85% | 2.85% | ||
Face amount of debt instrument | $ 2,650,000,000 | $ 2,650,000,000 | ||
$3,000 issued at discount to par at a price of 99.972% in October 2015 at 3.6%, due October 15, 2020, interest payable semi-annually on April 15 and October 15 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 2,999,000,000 | $ 2,999,000,000 | ||
Discount to par (as a percent) | 99.972% | 99.972% | ||
Interest rate (as a percent) | 3.60% | 3.60% | ||
Face amount of debt instrument | $ 3,000,000,000 | $ 3,000,000,000 | ||
$1,350 issued at discount to par at a price of 99.802% in October 2015 at 4.4%, due October 15, 2022, interest payable semi-annually on April 15 and October 15 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 1,348,000,000 | $ 1,347,000,000 | ||
Discount to par (as a percent) | 99.802% | 99.802% | ||
Interest rate (as a percent) | 4.40% | 4.40% | ||
Face amount of debt instrument | $ 1,350,000,000 | $ 1,350,000,000 | ||
$2,500 issued at discount to par at a price of 99.725% in October 2015 at 4.9%, due October 15, 2025, interest payable semi-annually on April 15 and October 15 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 2,494,000,000 | $ 2,493,000,000 | ||
Discount to par (as a percent) | 99.725% | 99.725% | ||
Interest rate (as a percent) | 4.90% | 4.90% | ||
Face amount of debt instrument | $ 2,500,000,000 | $ 2,500,000,000 | ||
$750 issued at discount to par at a price of 99.942% in October 2015 at 6.2%, due October 15, 2035, interest payable semi-annually on April 15 and October 15 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 750,000,000 | $ 749,000,000 | ||
Discount to par (as a percent) | 99.942% | 99.942% | ||
Interest rate (as a percent) | 6.20% | 6.20% | ||
Face amount of debt instrument | $ 750,000,000 | $ 750,000,000 | ||
$1,500 issued at discount to par at a price of 99.932% in October 2015 at 6.35%, due October 15, 2045, interest payable semi-annually on April 15 and October 15 of each year | ||||
Long-term debt | ||||
Total long-term debt | $ 1,499,000,000 | $ 1,499,000,000 | ||
Discount to par (as a percent) | 99.932% | 99.932% | ||
Interest rate (as a percent) | 6.35% | 6.35% | ||
Face amount of debt instrument | $ 1,500,000,000 | $ 1,500,000,000 | ||
$350 issued at par in October 2015 at three-month USD LIBOR plus 1.74%, due October 5, 2017, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year | LIBOR | ||||
Long-term debt | ||||
Total long-term debt | 350,000,000 | 350,000,000 | ||
Face amount of debt instrument | $ 350,000,000 | $ 350,000,000 | ||
Spread on reference interest rate (as a percent) | 1.74% | 1.74% | ||
$250 issued at par in October 2015 at three-month USD LIBOR plus 1.93%, due October 5, 2018, interest payable quarterly on January 5, April 5, July 5 and October 5 of each year | LIBOR | ||||
Long-term debt | ||||
Total long-term debt | $ 250,000,000 | $ 250,000,000 | ||
Interest rate (as a percent) | 1.93% | 1.93% | ||
Face amount of debt instrument | $ 250,000,000 | $ 250,000,000 | ||
$300 issued October 1999 at 7.45%, due October 2029 | ||||
Long-term debt | ||||
Total long-term debt | $ 312,000,000 | $ 313,000,000 | ||
Interest rate (as a percent) | 7.45% | 7.45% | ||
Face amount of debt instrument | $ 300,000,000 | $ 300,000,000 | ||
Other, including capital lease obligations, at 0.00%-7.45%, due in calendar years 2016-2022(2) | ||||
Long-term debt | ||||
Other, including capital lease obligations, at 0.00%-7.45%, due in calendar years 2016-2022(2) | $ 382,000,000 | $ 423,000,000 | ||
Minimum interest rate (as a percent) | 0.00% | 0.00% | ||
Maximum interest rate (as a percent) | 7.45% | 7.45% | ||
Other, including capital lease obligations, at 0.00%-7.45%, due in calendar years 2016-2022(2) | Financial Services | ||||
Long-term debt | ||||
Other, including capital lease obligations | $ 181,000,000 | $ 196,000,000 | ||
MphasiS | ||||
Long-term debt | ||||
Total long-term debt | $ 40,000,000 |
Borrowings (Details 3)
Borrowings (Details 3) | Nov. 01, 2015USD ($) | Nov. 30, 2015USD ($) | Oct. 31, 2016USD ($)item | Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | Nov. 23, 2016USD ($) |
Debt instruments | ||||||
Distribution of net proceeds of Senior Notes relating to separation to Parent | $ 0 | $ 14,529,000,000 | $ 0 | |||
Fair value adjustment related to hedged debt | 103,000,000 | (55,000,000) | ||||
Discount on debt issuance | 1,000,000 | |||||
Aggregate future maturities of debt outstanding including capital lease obligations | ||||||
2,017 | 2,777,000,000 | |||||
2,018 | 2,948,000,000 | |||||
2,019 | 40,000,000 | |||||
2,020 | 3,002,000,000 | |||||
2,021 | 57,000,000 | |||||
Thereafter | 6,458,000,000 | |||||
Total | 15,282,000,000 | |||||
Senior Notes | ||||||
Debt instruments | ||||||
Distribution of net proceeds of Senior Notes relating to separation to Parent | $ 14,500,000,000 | |||||
Debt issuance costs | 50,000,000 | $ 54,000,000 | ||||
Interest rate swaps value | 9,500,000,000 | |||||
Credit facilities | ||||||
Debt instruments | ||||||
Available borrowing resources | 1,884,000,000 | |||||
Unsecured revolving credit facility | ||||||
Debt instruments | ||||||
Amount available under credit facility | $ 4,000,000,000 | |||||
Term of credit facility | 5 years | |||||
Unsecured revolving credit facility | Maximum | ||||||
Debt instruments | ||||||
Credit agreement extension terms | two, one-year periods | |||||
FS Commercial paper | ||||||
Debt instruments | ||||||
Available borrowing resources | 4,174,000,000 | |||||
Maximum approved | $ 4,000,000,000 | |||||
Number of commercial paper programs | item | 2 | |||||
Maximum borrowing capacity under credit facility | $ 4,000,000,000 | |||||
FS Commercial paper | U.S. program | ||||||
Debt instruments | ||||||
Maximum borrowing capacity under credit facility | 4,000,000,000 | |||||
FS Commercial paper | Euro program | ||||||
Debt instruments | ||||||
Maximum borrowing capacity under credit facility | 3,000,000,000 | |||||
Hewlett Packard Enterprise | FS Commercial paper | Euro program | ||||||
Debt instruments | ||||||
Additional authorization | 500,000,000 | |||||
Hewlett-Packard International Bank PLC | FS Commercial paper | Euro Commercial Paper/Certificate of Deposit Programme | ||||||
Debt instruments | ||||||
Maximum borrowing capacity under credit facility | $ 500,000,000 | |||||
Subsequent Event | ||||||
Debt instruments | ||||||
Face amount of debt instrument | $ 14,600,000,000 |
Related Party Transactions an93
Related Party Transactions and Former Parent Company Investment (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Related Party Transactions | ||||
Agreement term | 5 years | |||
Separation related adjustments | $ 1,200 | |||
Parent Company | ||||
Related Party Transactions | ||||
Receivables from HP Inc. | $ 492 | |||
Payable to HP Inc. | (343) | |||
Net receivable from former Parent | 149 | |||
HP Inc | ||||
Related Party Transactions | ||||
Cash allocation from HP Inc. | $ 526 | |||
Intercompany Purchases | Parent Company | ||||
Related Party Transactions | ||||
Total net transfers per Combined and Consolidated Statements of Equity | 1,300 | $ 1,200 | ||
Corporate Allocations | Parent Company | ||||
Related Party Transactions | ||||
Total net transfers per Combined and Consolidated Statements of Equity | $ 3,600 | $ 4,200 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Taxes on change in net unrealized (losses) gains on available-for-sale securities: | |||
Tax benefit (provision) on net unrealized (losses) gains arising during the period | $ 2 | $ 2 | $ (1) |
Tax benefit on losses reclassified into earnings | (2) | 0 | 0 |
Taxes effect on change in unrealized (losses) gains on available-for-sales securities | 0 | 2 | (1) |
Taxes on change in net unrealized (losses) gains on cash flow hedges: | |||
Tax provision on net unrealized gains arising during the period | (14) | (69) | (32) |
Tax provision on net (gains) losses reclassified into earnings | 25 | 76 | 1 |
Taxes effect on change in unrealized gains (losses) on cash flow hedges | 11 | 7 | (31) |
Taxes on change in unrealized components of defined benefit plans: | |||
Tax benefit on losses arising during the period | 63 | 30 | 58 |
Tax benefit on amortization of actuarial loss and prior service benefit | (20) | (10) | (6) |
Tax provision on curtailments, settlements and other | (1) | 0 | (3) |
Tax benefit on Plans transferred from former Parent during the period | 0 | 255 | 0 |
Tax effect on change in unrealized components of defined benefit plans | 42 | 275 | 49 |
Tax on cumulative translation adjustment arising during the period | 20 | (73) | (27) |
Tax on release of cumulative translation adjustment as a result of H3C and MphasiS divestitures | (22) | 0 | 0 |
Taxes on change in cumulative translation adjustment: | (2) | (73) | (27) |
Tax benefit (provision) on other comprehensive loss | 51 | 211 | (10) |
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | (1,657) | ||
Reclassifications of (gains) losses into earnings | 73 | ||
Other comprehensive (loss) income, net of taxes | (1,584) | (2,767) | (553) |
Cumulative translation adjustment arising during the period | (134) | (271) | (112) |
Release of cumulative translation adjustment as a result of H3C and MphasiS divestitures | 53 | 0 | 0 |
Change in foreign currency translation adjustment | (81) | (271) | (112) |
Change in net unrealized (losses) gains on available-for-sale securities: | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | (2) | (8) | 4 |
Reclassifications of (gains) losses into earnings | 1 | ||
Other comprehensive (loss) income, net of taxes | (1) | (8) | 3 |
Change in net unrealized (losses) gains on available-for-sale securities: | Reclassifications of losses (gains) into earnings | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Reclassifications of (gains) losses into earnings | 1 | 0 | (1) |
Net unrealized gains (losses) on cash flow hedges | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | 212 | 412 | 79 |
Reclassifications of (gains) losses into earnings | (245) | ||
Other comprehensive (loss) income, net of taxes | (33) | 8 | 140 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Reclassifications of (gains) losses into earnings | (245) | (404) | 61 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (270) | (480) | 60 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | Net revenue | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (19) | (276) | 4 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | Cost of products | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | 0 | (6) | (3) |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | Other operating expenses | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | 0 | 4 | 9 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | Gain on MphasiS divestiture | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (8) | 0 | 0 |
Net unrealized gains (losses) on cash flow hedges | Reclassifications of losses (gains) into earnings | Cash flow hedges | Interest and other, net | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (243) | (202) | 50 |
Change in unrealized components of defined benefit plans: | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | (1,733) | ||
Reclassifications of (gains) losses into earnings | 264 | ||
Other comprehensive (loss) income, net of taxes | (1,469) | (2,496) | (584) |
Losses arising during the period | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | (1,714) | (352) | (736) |
Amortization of actuarial loss and prior service benefit | Reclassifications of losses (gains) into earnings | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Reclassifications of (gains) losses into earnings | 264 | 204 | 76 |
Curtailments, settlements and other | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income, net of taxes | (19) | 4 | 15 |
Plans transferred from former Parent during the period | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income, net of taxes | 0 | (2,352) | 0 |
Merged into Parent's Shared plan during the period | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income, net of taxes | 0 | $ 0 | $ 61 |
Cumulative translation adjustment | |||
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes | |||
Other comprehensive (loss) income before reclassifications | (134) | ||
Reclassifications of (gains) losses into earnings | $ 53 |
Stockholders' Equity (Details
Stockholders' Equity (Details 2) - USD ($) $ / shares in Units, shares in Millions | 12 Months Ended | ||||||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | May 31, 2016 | May 24, 2016 | Nov. 30, 2015 | Oct. 13, 2015 | |
Components of accumulated other comprehensive income, net of taxes | |||||||
Balance at beginning of period | $ (5,015,000,000) | ||||||
Other comprehensive (loss) income before reclassifications | (1,657,000,000) | ||||||
Reclassifications of (gains) losses into earnings | 73,000,000 | ||||||
Balance at end of period | $ (6,599,000,000) | $ (5,015,000,000) | |||||
Dividends | |||||||
Cash dividends declared per share (in dollars per share) | $ 0.22 | $ 0 | $ 0 | ||||
Stock Repurchase Program | |||||||
Stock repurchase program authorized amount | $ 3,000,000,000 | ||||||
Share Repurchase Program | |||||||
Stock Repurchase Program | |||||||
Stock repurchase program authorized amount | $ 3,000,000,000 | ||||||
Retired (shares) | 158 | ||||||
Remaining authorization | $ 3,300,000,000 | ||||||
Accelerated Share Repurchase Agreement | |||||||
Stock Repurchase Program | |||||||
Payment | $ 1,450,000,000 | $ 1,075,000,000 | |||||
Total repurchases of common stock (shares) | 148 | ||||||
Repurchased | $ 2,700,000,000 | ||||||
Net unrealized gains (losses) on available-for-sale securities | |||||||
Components of accumulated other comprehensive income, net of taxes | |||||||
Balance at beginning of period | 55,000,000 | ||||||
Other comprehensive (loss) income before reclassifications | (2,000,000) | $ (8,000,000) | $ 4,000,000 | ||||
Reclassifications of (gains) losses into earnings | 1,000,000 | ||||||
Balance at end of period | 54,000,000 | 55,000,000 | |||||
Net unrealized gains (losses) on cash flow hedges | |||||||
Components of accumulated other comprehensive income, net of taxes | |||||||
Balance at beginning of period | 68,000,000 | ||||||
Other comprehensive (loss) income before reclassifications | 212,000,000 | 412,000,000 | $ 79,000,000 | ||||
Reclassifications of (gains) losses into earnings | (245,000,000) | ||||||
Balance at end of period | 35,000,000 | 68,000,000 | |||||
Unrealized components of defined benefit plans | |||||||
Components of accumulated other comprehensive income, net of taxes | |||||||
Balance at beginning of period | (4,173,000,000) | ||||||
Other comprehensive (loss) income before reclassifications | (1,733,000,000) | ||||||
Reclassifications of (gains) losses into earnings | 264,000,000 | ||||||
Balance at end of period | (5,642,000,000) | (4,173,000,000) | |||||
Cumulative translation adjustment | |||||||
Components of accumulated other comprehensive income, net of taxes | |||||||
Balance at beginning of period | (965,000,000) | ||||||
Other comprehensive (loss) income before reclassifications | (134,000,000) | ||||||
Reclassifications of (gains) losses into earnings | 53,000,000 | ||||||
Balance at end of period | $ (1,046,000,000) | $ (965,000,000) |
Net Earnings Per Share (Detail)
Net Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Millions | Nov. 01, 2015 | Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Numerator: | |||||
Net earnings | $ 3,161 | $ 2,461 | $ 1,648 | ||
Denominator: | |||||
Weighted-average shares used to compute basic net EPS (shares) | [1] | 1,715,000,000 | 1,804,000,000 | 1,804,000,000 | |
Dilutive effect of employee stock plans (shares) | 24,000,000 | 30,000,000 | 30,000,000 | ||
Weighted-average shares used to compute diluted net EPS (shares) | [1] | 1,739,000,000 | 1,834,000,000 | 1,834,000,000 | |
Net earnings per share: | |||||
Basic (in dollars per share) | [1] | $ 1.84 | $ 1.36 | $ 0.91 | |
Diluted (in dollars per share) | [1] | $ 1.82 | $ 1.34 | $ 0.90 | |
Anti-dilutive weighted average stock awards (in shares) | 32,000,000 | 28,000,000 | 28,000,000 | ||
HP Inc. | |||||
Other information related to EPS computation | |||||
Shares distributed (shares) | 1 | ||||
[1] | On November 1, 2015, HP Inc. (formerly Hewlett-Packard Company) distributed a total of 1.8 billion shares of Hewlett Packard Enterprise common stock to HP Inc. stockholders as of the record date. The number of shares used to compute basic and diluted net earnings per share ("EPS") for the period ended October 31, 2015 is used for the calculation of net EPS for October 31, 2014. See Note 16, "Net Earnings Per Share", for further details. |
Litigation and Contingencies (D
Litigation and Contingencies (Detail) $ in Millions | Jun. 30, 2016USD ($) | Aug. 21, 2015USD ($) | Jan. 24, 2013USD ($) | Dec. 11, 2012USD ($) | Apr. 21, 2012USD ($) | May 10, 2010USD ($)item | Apr. 29, 2010USD ($) | Apr. 30, 2014 | Sep. 30, 2013item | Oct. 31, 2016lawsuit | Oct. 31, 2007item | Apr. 20, 2012USD ($) | Apr. 11, 2012USD ($) |
Litigation and Contingencies | |||||||||||||
Damages sought | $ 370 | ||||||||||||
Period of compliance reporting obligation | 3 years | ||||||||||||
India Directorate of Revenue Intelligence Proceedings | |||||||||||||
Litigation and Contingencies | |||||||||||||
Number of HP India employees alleging underpaid customs | item | 7 | ||||||||||||
Number of former HP India employees alleging underpaid customs | item | 1 | ||||||||||||
Loss contingency deposit to prevent interruption of business | $ 16 | ||||||||||||
Bangalore Commissioner of Customs | |||||||||||||
Litigation and Contingencies | |||||||||||||
Duties and penalties under show cause notices | $ 17 | $ 386 | |||||||||||
Amount deposited under show cause notice prior to order | $ 7 | $ 9 | |||||||||||
Additional amount deposited against products-related show cause notice | $ 10 | ||||||||||||
Additional amount deposited against parts-related show cause notice | $ 3 | ||||||||||||
Additional amount deposited against product order | $ 24 | ||||||||||||
ECT Proceedings | |||||||||||||
Litigation and Contingencies | |||||||||||||
Number of ECT contracts related to alleged improprieties | item | 3 | ||||||||||||
ECT Proceedings | Minimum | |||||||||||||
Litigation and Contingencies | |||||||||||||
Length of sanctions | 2 years | ||||||||||||
ECT Proceedings | Maximum | |||||||||||||
Litigation and Contingencies | |||||||||||||
Length of sanctions | 5 years | ||||||||||||
Cisco Systems | |||||||||||||
Litigation and Contingencies | |||||||||||||
Damages sought | $ 58 | ||||||||||||
Washington Dc Navy Yard Litigation | |||||||||||||
Litigation and Contingencies | |||||||||||||
Number of individual deaths from shooting incident | item | 12 | ||||||||||||
Number of additional lawsuits filed | lawsuit | 15 | ||||||||||||
Number of lawsuits filed | lawsuit | 6 | ||||||||||||
Pending Litigation | Benedict | |||||||||||||
Litigation and Contingencies | |||||||||||||
Number of plaintiffs | lawsuit | 3 | ||||||||||||
Oracle | Judicial Ruling | |||||||||||||
Litigation and Contingencies | |||||||||||||
Settlement amount | $ 3,000 | ||||||||||||
Oracle - Past Lost Profits | Judicial Ruling | |||||||||||||
Litigation and Contingencies | |||||||||||||
Settlement amount | 1,700 | ||||||||||||
Oracle - Future Lost Profits | Judicial Ruling | |||||||||||||
Litigation and Contingencies | |||||||||||||
Settlement amount | $ 1,300 |
Guarantees, Indemnifications 98
Guarantees, Indemnifications and Warranties (Details) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2016 | Oct. 31, 2015 | |
Changes in aggregated product warranty liabilities | ||
Balance at beginning of year | $ 523 | $ 571 |
Accruals for warranties issued | 376 | 373 |
Adjustments related to pre-existing warranties (including changes in estimates) | 1 | (16) |
Divested as part of the H3C transaction | (23) | 0 |
Settlements made (in cash or in kind) | (380) | (405) |
Balance at end of year | 497 | 523 |
HP Inc. | ||
Tax Matters Agreements | ||
Certain income tax receivable | 1,300 | |
HP Inc. | Cross-Indemnifications | ||
General Cross indemnifications | ||
Receivables from HP Inc. | 232 | 56 |
Payable to HP Inc. | $ 41 | $ 38 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 700 | $ 700 | $ 800 |
Property under capital lease | 173 | 203 | |
Accumulated depreciation on property under capital lease | 161 | $ 186 | |
Operating lease commitments, sublease rental income | |||
2,017 | 557 | ||
2,018 | 464 | ||
2,019 | 333 | ||
2,020 | 257 | ||
2,021 | 185 | ||
Thereafter | 594 | ||
Less: Sublease rental income | (169) | ||
Total | 2,221 | ||
Unconditional purchase obligations | 1,800 | ||
Unconditional purchase obligations details | |||
2,017 | 537 | ||
2,018 | 529 | ||
2,019 | 419 | ||
2,020 | 175 | ||
2,021 | 122 | ||
Thereafter | 16 | ||
Total | $ 1,798 |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Oct. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | May 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||||
Investment in equity interests | $ 2,648 | $ 0 | ||
Loss from equity interests | $ 76 | $ 2 | $ 0 | |
H3C | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership | 49.00% | 49.00% | ||
Investment in equity interests | $ 2,600 | $ 2,739 | ||
Proportionate share of net assets of H3C | 205 | |||
Basis difference | 2,534 | |||
Equity method goodwill | 1,674 | |||
Intangible assets | 749 | |||
In-process research and development | 188 | |||
Deferred tax liabilities | (152) | |||
Other | $ 75 | |||
Loss from equity interests | $ 76 | |||
Weighted-average useful life | 5 years | |||
Amortization of difference in basis | $ 93 | |||
Elimination of intra-entity sales | 15 | |||
Investment's earnings | $ 32 | |||
Unisplendour | H3C | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership | 51.00% |