Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2017 | May 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Hewlett Packard Enterprise Co, | |
Entity Central Index Key | 1,645,590 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,642,630,237 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | ||
Net revenue: | |||||
Products | $ 4,128 | $ 5,017 | $ 8,425 | $ 10,074 | |
Services | 3,221 | 3,404 | 6,387 | 6,791 | |
Financing income | 96 | 88 | 189 | 176 | |
Total net revenue | 7,445 | 8,509 | 15,001 | 17,041 | |
Costs and expenses: | |||||
Cost of products | 2,917 | 3,351 | 5,804 | 6,700 | |
Cost of services | 1,945 | 2,055 | 3,816 | 4,049 | |
Financing interest | 65 | 61 | 131 | 119 | |
Research and development | 486 | 621 | 967 | 1,203 | |
Selling, general and administrative | 1,449 | 1,648 | 2,903 | 3,324 | |
Amortization of intangible assets | 107 | 101 | 208 | 220 | |
Restructuring charges | 118 | 87 | 234 | 253 | |
Acquisition and other related charges | 51 | 43 | 95 | 80 | |
Separation costs | 141 | 91 | 226 | 170 | |
Defined benefit plan settlement charges and remeasurement (benefit) | [1] | (16) | 0 | (21) | 0 |
Total costs and expenses | 7,263 | 8,058 | 14,363 | 16,118 | |
Earnings from continuing operations | 182 | 451 | 638 | 923 | |
Interest and other, net | (85) | (52) | (163) | (126) | |
Tax indemnification adjustments | 7 | (69) | (11) | (54) | |
Loss from equity interests | (3) | 0 | (25) | 0 | |
Earnings from continuing operations before taxes | 101 | 330 | 439 | 743 | |
Provision for taxes | (588) | (8) | (671) | (59) | |
Net (loss) earnings from continuing operations | (487) | 322 | (232) | 684 | |
Net loss from discontinued operations | (125) | (2) | (113) | (97) | |
Net (loss) earnings | $ (612) | $ 320 | $ (345) | $ 587 | |
Net earnings per share: | |||||
Basic - Continuing operations (in dollars per share) | $ (0.29) | $ 0.19 | $ (0.14) | $ 0.39 | |
Basic - Discontinued operations (in dollars per share) | (0.08) | 0 | (0.07) | (0.06) | |
Total basic net (loss) earnings per share (in dollars per share) | (0.37) | 0.19 | (0.21) | 0.33 | |
Diluted - Continuing operations (in dollars per share) | (0.29) | 0.18 | (0.14) | 0.39 | |
Diluted - Discontinued operations (in dollars per share) | (0.08) | 0 | (0.07) | (0.06) | |
Total diluted net (loss) earnings per share (in dollars per share) | (0.37) | 0.18 | (0.21) | 0.33 | |
Cash dividends declared per share (in dollars per share) | $ 0.065 | $ 0.055 | $ 0.195 | $ 0.165 | |
Weighted-average shares used to compute net (loss) earnings per share: | |||||
Basic (in shares) | 1,658 | 1,725 | 1,664 | 1,743 | |
Diluted (in shares) | 1,658 | 1,751 | 1,664 | 1,765 | |
[1] | Represents adjustments to the net periodic pension cost resulting from remeasurements of certain Hewlett Packard Enterprise pension plans due to plan separations in connection with the spin-off and merger of Everett SpinCo, Inc. with Computer Sciences Corporation. |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) earnings | $ (612) | $ 320 | $ (345) | $ 587 |
Change in net unrealized (losses) gains on available-for-sale securities: | ||||
Net unrealized (losses) gains arising during the period | (4) | 2 | (17) | 4 |
(Gains) losses reclassified into earnings | 0 | (5) | 0 | 4 |
Change in unrealized gains on available for sale securities | (4) | (3) | (17) | 8 |
Change in net unrealized losses on cash flow hedges: | ||||
Net unrealized gains (losses) arising during the period | 4 | (206) | 140 | (64) |
Net gains reclassified into earnings | (83) | (70) | (246) | (191) |
Change in unrealized gains on cash flow hedges | (79) | (276) | (106) | (255) |
Change in unrealized components of defined benefit plans: | ||||
Gains (losses) arising during the period | 11 | (1) | 490 | (1) |
Amortization of actuarial loss and prior service benefit | 77 | 70 | 174 | 142 |
Curtailments, settlements and other | 3 | 1 | 3 | (17) |
Change in unrealized components of defined benefit plans | 91 | 70 | 667 | 124 |
Change in cumulative translation adjustment | (11) | 57 | (36) | (82) |
Other comprehensive (loss) income before taxes | (3) | (152) | 508 | (205) |
Benefit (provision) for taxes | 4 | 77 | (32) | 53 |
Other comprehensive income (loss), net of taxes | 1 | (75) | 476 | (152) |
Comprehensive (loss) income | $ (611) | $ 245 | $ 131 | $ 435 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 | |
Current assets: | |||
Cash and cash equivalents | $ 8,101 | $ 12,987 | |
Accounts receivable | 3,810 | 3,816 | |
Financing receivables | 3,229 | 3,360 | |
Inventory | 2,041 | 1,740 | |
Other current assets | 3,092 | 2,771 | |
Current assets of discontinued operations | 0 | 4,243 | |
Total current assets | 20,273 | 28,917 | |
Property, plant and equipment | 6,692 | 6,304 | |
Long-term financing receivables and other assets | [1] | 10,847 | 11,575 |
Investments in equity interests | 2,620 | 2,648 | |
Goodwill | 25,498 | 24,178 | |
Intangible assets | 1,540 | 1,084 | |
Non-current assets of discontinued operations | 0 | 4,923 | |
Total assets | 67,470 | 79,629 | |
Current liabilities: | |||
Notes payable and short-term borrowings | [1] | 2,010 | 3,527 |
Accounts payable | 5,194 | 5,010 | |
Employee compensation and benefits | 1,189 | 1,526 | |
Taxes on earnings | 755 | 365 | |
Deferred revenue | 3,829 | 3,761 | |
Accrued restructuring | 228 | 301 | |
Other accrued liabilities | 4,373 | 3,857 | |
Current liabilities of discontinued operations | 0 | 4,182 | |
Total current liabilities | 17,578 | 22,529 | |
Long-term debt | [1] | 11,904 | 12,168 |
Other non-current liabilities | 8,941 | 9,401 | |
Non-current liabilities of discontinued operations | 0 | 4,013 | |
Commitments and contingencies | |||
HPE stockholders' equity: | |||
Preferred stock, $0.01 par value (300 shares authorized; none issued and outstanding at April 30, 2017) | 0 | 0 | |
Common stock, $0.01 par value (9,600 shares authorized; 1,646 and 1,666 shares issued and outstanding at April 30, 2017 and October 31, 2016, respectively) | 16 | 17 | |
Additional paid-in capital | 34,406 | 35,248 | |
Retained earnings | (1,867) | 2,782 | |
Accumulated other comprehensive loss | (3,544) | (6,599) | |
Total HPE stockholders' equity | 29,011 | 31,448 | |
Non-controlling interests of continuing operations | 36 | 40 | |
Non-controlling interests of discontinued operations | 0 | 30 | |
Total stockholders' equity | 29,047 | 31,518 | |
Total liabilities and stockholders' equity | $ 67,470 | $ 79,629 | |
[1] | During the first quarter of fiscal 2017, the Company adopted ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company adopted the standard retrospectively for the prior period presented. |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 30, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 300,000,000 | 300,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,600,000,000 | 9,600,000,000 |
Common stock, shares issued | 1,646,000,000 | 1,666,000,000 |
Common stock, shares outstanding | 1,646,000,000 | 1,666,000,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | ||
Cash flows from operating activities: | |||
Net (loss) earnings | $ (345) | $ 587 | |
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 1,632 | 1,949 | |
Stock-based compensation expense | 252 | 303 | |
Provision for doubtful accounts | (1) | 26 | |
Provision for inventory | 40 | 83 | |
Restructuring charges | 393 | 472 | |
Deferred taxes on earnings | 506 | (31) | |
Excess tax benefit from stock-based compensation | (98) | (4) | |
Loss from equity interests | 25 | 0 | |
Other, net | 310 | 79 | |
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | 301 | 366 | |
Financing receivables | 120 | (209) | |
Inventory | (210) | (186) | |
Accounts payable | 129 | (412) | |
Taxes on earnings | (386) | (347) | |
Restructuring | (545) | (489) | |
Other assets and liabilities | [1] | (2,951) | (1,155) |
Net cash (used in) provided by operating activities | (828) | 1,032 | |
Cash flows from investing activities: | |||
Investment in property, plant and equipment | (1,681) | (1,552) | |
Proceeds from sale of property, plant and equipment | 142 | 200 | |
Purchases of available-for-sale securities and other investments | (26) | (341) | |
Maturities and sales of available-for-sale securities and other investments | 2 | 270 | |
Financial collateral posted | (226) | 0 | |
Financial collateral returned | 49 | 0 | |
Payments made in connection with business acquisitions, net of cash acquired | (2,050) | (13) | |
(Payments) proceeds from business divestitures, net | [2] | (20) | 315 |
Net cash used in investing activities | (3,810) | (1,121) | |
Cash flows from financing activities: | |||
Short-term borrowings with original maturities less than 90 days, net | 28 | (36) | |
Proceeds from debt, net of issuance costs | 541 | 570 | |
Payment of debt | (2,102) | (354) | |
Settlement of cash flow hedge | 0 | 3 | |
Issuance of common stock under employee stock plans | 265 | 18 | |
Repurchase of common stock | (1,311) | (1,212) | |
Net transfer from former Parent | 0 | 491 | |
Special cash dividend from Everett | [3] | 3,008 | 0 |
Net transfer of cash and cash equivalents to Everett | (559) | 0 | |
Excess tax benefit from stock-based compensation | 98 | 4 | |
Cash dividends paid | (216) | (190) | |
Net cash used in financing activities | (248) | (706) | |
Decrease in cash and cash equivalents | (4,886) | (795) | |
Cash held for sale | [4] | 0 | (37) |
Cash and cash equivalents at beginning of period | 12,987 | 9,842 | |
Cash and cash equivalents at end of period | 8,101 | 9,010 | |
Supplemental schedule of non-cash investing and financing activities: | |||
Net assets transferred to Everett | 322 | $ 0 | |
Dividend | 3,000 | ||
Everett SpinCo | |||
Supplemental schedule of non-cash investing and financing activities: | |||
Proceeds from debt | 3,500 | ||
Non-U.S. Defined Benefit Plans | |||
Supplemental schedule of non-cash investing and financing activities: | |||
Contributions to benefit plans | 2,100 | ||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | Non-U.S. Defined Benefit Plans | |||
Supplemental schedule of non-cash investing and financing activities: | |||
Contributions to benefit plans | $ 1,900 | ||
[1] | For the six months ended April 30, 2017, the amount includes $1.9 billion of pension funding payments associated with the spin-off and merger of Everett SpinCo, Inc. with Computer Sciences Corporation. | ||
[2] | For the six months ended April 30, 2017, the amount represents a working capital adjustment payment made in connection with the H3C divestiture. | ||
[3] | Represents a $3.0 billion cash dividend payment from Everett SpinCo, Inc. to HPE, the proceeds of which were funded from the issuance of $3.5 billion of debt by Everett SpinCo, Inc. The obligations under the debt issuance were retained by Everett SpinCo, Inc. See Note 14, "Borrowings", for more information on the funding arrangement. | ||
[4] | During the second quarter of fiscal 2016, the Company received all of the necessary regulatory approvals related to its partnership with Tsinghua Holdings, and as such, the transaction met all of the held for sale criteria. The transaction closed in May 2016. The impact of assets and liabilities reclassified as held for sale during the period was not considered in the changes in operating assets and liabilities, net of acquisitions reconciliation within cash flows from operating activities. |
Overview and Basis of Presentat
Overview and Basis of Presentation | 6 Months Ended |
Apr. 30, 2017 | |
Accounting Policies [Abstract] | |
Overview and Basis of Presentation | Overview and Basis of Presentation Background Hewlett Packard Enterprise Company ("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 information technology ("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. Former Parent Separation Transaction 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 19, "Guarantees, Indemnifications and Warranties", for a full description of the Tax Matters Agreement. Enterprise Services Business Separation Transaction On April 1, 2017, HPE completed the previously announced separation and merger of its Enterprise Services business with Computer Sciences Corporation ("CSC") (collectively, the "Everett Transaction"). The Everett Transaction was accomplished by a series of transactions among CSC, HPE, Everett SpinCo, Inc. (a wholly-owned subsidiary of HPE) ("Everett"), and New Everett Merger Sub Inc., a wholly-owned subsidiary of Everett ("Merger Sub"). HPE transferred its Enterprise Services business to Everett and distributed all of the shares of Everett to HPE stockholders. HPE stockholders received 0.085904 shares of common stock in the new company for every one share of HPE common stock held at the close of business on the record date. Following the distribution, the Merger Sub merged with and into CSC, which will continue as a wholly-owned subsidiary of Everett. At the time of the merger, Everett changed its name to DXC Technology Company ("DXC"). In connection with the Everett Transaction, Everett borrowed an aggregate principal amount of approximately $3.5 billion which consisted of Senior Notes in the principal amount of $1.5 billion and a term loan facility in the principal amount of $2.0 billion . The proceeds from these arrangements were used to fund a $3.0 billion cash dividend payment from Everett to HPE and the remaining approximately $0.5 billion was retained by Everett. The obligations under these borrowing arrangements were retained by Everett. In connection with the Everett Transaction, HPE and Everett and, in some cases, CSC, entered into several agreements that will govern the relationship between the parties going forward, including an Employee Matters Agreement, a Tax Matters Agreement, an Intellectual Property Matters Agreement, a Transition Services Agreement, and a Real Estate Matters Agreement. For more information on the impact of these agreements, see Note 2, "Discontinued Operations", Note 5, "Retirement and Post-Retirement Benefit Plans", Note 7, "Taxes on Earnings", Note 18, "Litigation and Contingencies", and Note 19, "Guarantees, Indemnifications and Warranties". September 2016 Announcement of Spin-Off and Merger of Software Segment On September 7, 2016, the Company announced plans for a spin-off and merger of its Software segment (“Seattle”) with Micro Focus International plc (“Micro Focus”) (collectively, the “Seattle Transaction”), which will create a pure-play enterprise software company. Upon the completion of the Seattle Transaction, which is currently anticipated to close on September 1, 2017, shareholders of Hewlett Packard Enterprise Company will own shares of both Hewlett Packard Enterprise and 50.1% of the new combined company. The transaction also includes a cash dividend of $2.5 billion from Seattle to Hewlett Packard Enterprise. The Seattle Transaction is subject to certain customary closing conditions. Basis of Presentation These Condensed Consolidated Financial Statements of the Company were prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of April 30, 2017 and October 31, 2016 , its results of operations for the three and six months ended April 30, 2017 and 2016 and its cash flows for the six months ended April 30, 2017 and 2016 . The results of operations and cash flows for the six months ended April 30, 2017 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2016 , including "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated and Combined Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, included therein. The historical results of operations and financial position of Everett are included in the Condensed Consolidated Financial Statements and reported as discontinued operations in all periods presented within this Quarterly Report on Form 10-Q, with the exception of the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows. The historical information in the accompanying Notes to the Condensed Consolidated Financial Statements has been restated to reflect the effect of the Everett Transaction, with the exception of stockholders' equity. For further information on discontinued operations, see Note 2, "Discontinued Operations". Principles of Consolidation The accompanying unaudited Condensed Consolidated 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 businesses of the Company have been eliminated. 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 Earnings (loss) from equity interests in the Condensed Consolidated Statements of Earnings. Non-controlling interests are presented as a separate component within Total stockholders' equity in the Condensed Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Condensed Consolidated Statements of Earnings and are not presented separately, as they were not material for any period presented. Segment Realignment and Reclassifications Effective at the beginning of the first quarter of fiscal 2017, the Company 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 and other 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 3, "Segment Information", for a further discussion of the Company's segment realignment. Prior to the completion of the Everett Transaction and effective at the beginning of the second quarter of fiscal 2017, the Company realigned certain product groups that were historically managed by the former Enterprise Services segment ("former ES segment") and included in the former ES segment's results of operations. This realignment is reflected in HPE's Condensed Consolidated Financial Statements as a transfer of the MphasiS product group to the Corporate Investments segment. For additional information related to the realignment, see Note 3, "Segment Information". 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 Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Recently Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“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 adopted the amendments in the first quarter of fiscal 2017 and applied them retrospectively to all periods presented, as permitted by the standard. The adoption of these amendments did not have a material impact on the Company's Condensed Consolidated 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 adopted the amendments in the first quarter of fiscal 2017 and applied them retrospectively to all periods presented. For fiscal 2016, the adoption resulted in the reclassification of $50 million of debt issuance costs from Long-term financing receivables and other assets to Notes payable and short-term borrowings and Long-term debt on the Condensed Consolidated Balance Sheets. The adoption of these amendments did not have a material impact on the Company's Condensed Consolidated Financial Statements. Recently Enacted Accounting Pronouncements In March 2017, the FASB amended the existing accounting standard for retirement benefits. The amendments require the presentation of the service cost component of net periodic benefit cost in the same income statement line items as other employee compensation costs, unless eligible for capitalization. The other components of net periodic benefit costs will be presented separately from service cost as non-operating costs. 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 Condensed Consolidated Financial Statements. In October 2016, the FASB amended the existing accounting standards for income taxes. The amendments require the recognition of the income tax consequences for intra-entity transfers of assets other than inventory when the transfer occurs. 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 Condensed Consolidated 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 Condensed Consolidated Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and lease 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 Condensed Consolidated 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 and the impact of these amendments on its Condensed Consolidated 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 Condensed Consolidated 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 plans to adopt the new revenue standard in the first quarter of fiscal 2019, beginning November 1, 2018, using the modified retrospective method, and is currently assessing the impact on its Condensed Consolidated Financial Statements. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Apr. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On April 1, 2017, HPE completed the Everett Transaction. As a result, HPE distributed all of the shares of Everett to HPE stockholders. HPE stockholders received 0.085904 shares of common stock in the new company for every one share of HPE common stock held at the close of business on the record date. Following the share distribution, the Merger Sub merged with and into CSC, which will continue as a wholly-owned subsidiary of Everett. At the time of the merger, Everett changed its name to DXC. HPE and Everett have entered into several agreements that govern the relationship between the parties, including the following: • Separation and Distribution Agreement; • Transition Services Agreement; • Tax Matters Agreement; • Employee Matters Agreement; • Real Estate Matters Agreement; • Intellectual Property Matters Agreement; • Information Technology Service Agreement; and • Preferred Vendor Agreements These agreements provide for the allocation of assets, employees, liabilities and obligations (including its investments, property, employee benefits, litigation, and tax-related assets and liabilities) between HPE and Everett, attributable to periods prior to, at and after the separation. Obligations under the service and commercial contracts generally extend through five years. With the completion of the Everett Transaction, HPE no longer consolidates the financial results of Everett within its financial results from continuing operations. For all periods prior to the Everett Transaction, the financial results of Everett are presented as Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings and in assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets. The following table presents the financial results for HPE's discontinued operations up to the completion of the separation on April 1, 2017. For the period following the completion of the Everett Transaction, discontinued operations primarily includes separation costs related to third-party consulting, contractor fees and other incremental costs arising from the transaction: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Net Revenue $ 2,487 $ 4,202 $ 6,338 $ 8,394 Cost of revenue (1) 2,073 3,601 5,357 7,312 Expenses (2) 643 560 1,203 1,129 Interest and other, net 4 8 4 14 (Loss) earnings from discontinued operations before taxes (233 ) 33 (226 ) (61 ) Benefit (provision) for taxes 108 (35 ) 113 (36 ) Net loss from discontinued operations $ (125 ) $ (2 ) $ (113 ) $ (97 ) (1) Cost of revenue includes cost of products and cost of services. (2) Expenses for the three and six months ended April 30, 2017 and 2016 include expenses primarily consisting of selling, general and administrative (“SG&A”) expenses, research and development (“R&D”) expenses, restructuring charges, separation costs related to the Everett Transaction, amortization of intangible assets, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement (benefit). For the three and six months ended April 30, 2017 and 2016 , significant non-cash items and capital expenditures of discontinued operations are outlined below: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Depreciation and amortization $ 129 $ 358 $ 388 $ 734 Purchases of property, plant and equipment $ 53 $ 224 $ 131 $ 486 The following table presents assets and liabilities that are presented as discontinued operations in the Consolidated Balance Sheet as of October 31, 2016 and that were transferred to Everett as of April 1, 2017: As of October 31, 2016 Accounts receivable $ 3,093 Inventory 34 Other current assets 1,116 Total current assets of discontinued operations $ 4,243 Property, plant and equipment $ 3,332 Long-term financing receivables and other non-current assets 1,591 Total non-current assets of discontinued operations $ 4,923 Notes payable and short-term borrowings $ 3 Accounts payable 933 Employee compensation and benefits 838 Taxes on earnings 55 Deferred revenue 849 Other accrued liabilities 1,504 Total current liabilities of discontinued operations $ 4,182 Long-term debt $ 392 Other non-current liabilities 3,621 Total non-current liabilities of discontinued operations $ 4,013 In the second quarter of fiscal 2017, in connection with the Everett Transaction, HPE made a net cash transfer of $559 million to DXC. Further working capital adjustments are expected through December 2017. |
Segment Information
Segment Information | 6 Months Ended |
Apr. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Hewlett Packard Enterprise's operations are organized into four segments for financial reporting purposes: the Enterprise Group ("EG"), 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 its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results. 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 the business units and capabilities within the Enterprise Group. • 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 all-flash arrays, StoreServe, StoreOnce, Big Data, StoreVirtual and Software Defined and Cloud Group storage 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 creates preferred IT experiences that power a digital business. The Technology Services team and the Company's extensive partner network provide value across the IT life cycle delivering advice, transformation projects, professional services, support services, and operational services for Hybrid IT and at the IT Edge. Technology Services is also a provider of on-premises flexible consumption models that enable IT agility, simplify operations and align costs to business value. Some of the offerings include Data Center Care, Proactive Care, Technology Consulting, Aruba Services, and Communications and Media Solutions ("CMS"). Software provides comprehensive solutions across application testing and delivery management, big data platform analytics, security and information governance and IT operations management for organizations of varying sizes, from small- to medium- to large-scale enterprises. 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 to our customers. 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 7, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $439 million during fiscal 2017 and $3.7 billion during fiscal 2016. 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 are eliminated from both Hewlett Packard Enterprise consolidated and segment net revenues. Financing interest in the Condensed Consolidated Statements of Earnings reflects interest expense on borrowing- and funding-related activities associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise, a portion of the proceeds of which benefited FS. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include separation costs, restructuring charges, stock-based compensation expense, amortization of intangible assets, certain corporate governance costs, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement benefit. Segment Realignment As of April 1, 2017, with the completion of the Everett Transaction, the Company reclassified the historical net (loss) earnings from the former ES segment, to Net loss from discontinued operations in its Condensed Consolidated Statements of Earnings. Effective at the beginning of the first quarter of fiscal 2017, 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, primarily, the transfer of the big data storage product group previously reported within the Servers business unit to the Storage business unit; the transfer of the Aruba services capabilities previously reported within the Networking business unit to the Technology Services ("TS") business unit; and (ii) the transfer of the CMS product group previously reported within the former ES segment to the TS business unit within the Enterprise Group segment. The Company reflected these changes to its segment information retrospectively to the earliest period presented, which resulted in: (i) within the Enterprise Group segment, primarily, the transfer of net revenue from the big data storage product group previously reported within the Servers business unit to the Storage business unit; the transfer of net revenue from the Aruba services capabilities previously reported within the Networking business unit to the TS business unit; and (ii) the transfer of net revenue, related eliminations of intersegment revenues and operating profit from the CMS product group previously reported within the former ES segment to the Technology Services business unit within the Enterprise Group segment. Effective at the beginning of the second quarter of fiscal 2017 and prior to the completion of the Everett Transaction, the Company transferred historical net revenue and operating profit from the previously divested MphasiS product group which was reported within the former ES segment to the Corporate Investments segment. The changes within the Enterprise Group segment had no impact on Hewlett Packard Enterprise's previously reported Enterprise Group segment net revenue and earnings from operations. The change between the former ES segment and the Enterprise Group segment had no impact on Hewlett Packard Enterprise's previously reported consolidated net revenue, earnings from continuing operations, net earnings from continuing operations or net earnings per share from continuing operations. With the completion of the Everett Transaction, assets and liabilities of Everett were reclassified to assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheet as of October 31, 2016. Assets and liabilities previously allocated to the former ES segment, but which were not reclassified to assets and liabilities of discontinued operations, were allocated to the remaining four segments, primarily the Enterprise Group. During the six months ended April 30, 2017, the Company completed five business acquisitions, which resulted in the acquisition of assets and liabilities that are reported within the Enterprise Group segment. With the exception of the above, there have been no material changes to the total assets of Hewlett Packard Enterprise's individual segments since October 31, 2016 . Segment Operating Results from Continuing Operations Enterprise Group Software Financial Services Corporate Investments Total In millions Three months ended April 30, 2017 Net revenue $ 5,943 $ 637 $ 865 $ — $ 7,445 Intersegment net revenue and other (1) 300 48 7 — 355 Total segment net revenue $ 6,243 $ 685 $ 872 $ — $ 7,800 Segment earnings (loss) from operations $ 548 $ 181 $ 78 $ (38 ) $ 769 Three months ended April 30, 2016 Net revenue $ 6,870 $ 703 $ 764 $ 172 $ 8,509 Intersegment net revenue and other (1) 289 71 24 — 384 Total segment net revenue $ 7,159 $ 774 $ 788 $ 172 $ 8,893 Segment earnings (loss) from operations $ 847 $ 192 $ 73 $ (59 ) $ 1,053 Six months ended April 30, 2017 Net revenue $ 12,041 $ 1,291 $ 1,669 $ — $ 15,001 Intersegment net revenue and other (1) 527 115 26 — 668 Total segment net revenue $ 12,568 $ 1,406 $ 1,695 $ — $ 15,669 Segment earnings (loss) from operations $ 1,350 $ 335 $ 156 $ (81 ) $ 1,760 Six months ended April 30, 2016 Net revenue $ 13,752 $ 1,423 $ 1,518 $ 348 $ 17,041 Intersegment net revenue and other (1) 589 131 46 — 766 Total segment net revenue $ 14,341 $ 1,554 $ 1,564 $ 348 $ 17,807 Segment earnings (loss) from operations $ 1,811 $ 328 $ 173 $ (135 ) $ 2,177 (1) Other includes adjustments for sales to the former ES segment which, prior to the completion of the Everett Transaction, were reflected as intersegment net revenue. For the three and six months ended April 30, 2017 and April 30, 2016, the amounts include the elimination of intercompany sales to the former ES segment, which is included within Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings. The reconciliation of segment operating results to Hewlett Packard Enterprise condensed consolidated results was as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Net Revenue: Total segments $ 7,800 $ 8,893 $ 15,669 $ 17,807 Elimination of intersegment net revenue and other (355 ) (384 ) (668 ) (766 ) Total Hewlett Packard Enterprise condensed consolidated net revenue $ 7,445 $ 8,509 $ 15,001 $ 17,041 Earnings before taxes: Total segment earnings from operations $ 769 $ 1,053 $ 1,760 $ 2,177 Corporate and unallocated costs and eliminations (90 ) (177 ) (161 ) (301 ) Stock-based compensation expense (96 ) (103 ) (219 ) (230 ) Amortization of intangible assets (107 ) (101 ) (208 ) (220 ) Restructuring charges (118 ) (87 ) (234 ) (253 ) Acquisition and other related charges (51 ) (43 ) (95 ) (80 ) Separation costs (141 ) (91 ) (226 ) (170 ) Defined benefit plan settlement charges and remeasurement benefit 16 — 21 — Interest and other, net (85 ) (52 ) (163 ) (126 ) Tax indemnification adjustments 7 (69 ) (11 ) (54 ) Loss from equity interests (3 ) — (25 ) — Total Hewlett Packard Enterprise condensed consolidated earnings from continuing operations before taxes $ 101 $ 330 $ 439 $ 743 Net revenue by segment and business unit was as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Servers $ 2,991 $ 3,498 $ 6,094 $ 7,034 Technology Services 1,971 2,019 3,914 4,004 Storage 699 808 1,429 1,645 Networking 582 834 1,131 1,658 Enterprise Group 6,243 7,159 12,568 14,341 Software 685 774 1,406 1,554 Financial Services 872 788 1,695 1,564 Corporate Investments — 172 — 348 Total segment net revenue 7,800 8,893 15,669 17,807 Elimination of intersegment net revenue and other (355 ) (384 ) (668 ) (766 ) Total Hewlett Packard Enterprise condensed consolidated net revenue $ 7,445 $ 8,509 $ 15,001 $ 17,041 |
Restructuring
Restructuring | 6 Months Ended |
Apr. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring Summary of Restructuring Plans Restructuring charges of $118 million and $87 million have been recorded by the Company for the three months ended April 30, 2017 and 2016 , respectively, and restructuring charges of $234 million and $253 million have been recorded for the six months ended April 30, 2017 and 2016 , respectively, based on restructuring activities impacting the Company's employees and infrastructure. Restructuring activities related to the Company's employees and infrastructure, summarized by plan, are presented in the table below: Fiscal 2015 Plan Fiscal 2012 Plan Employee Severance Infrastructure and other Employee Severance and EER Infrastructure and other Total In millions Liability as of October 31, 2016 $ 277 $ 22 $ 39 $ 15 $ 353 Charges 198 28 8 — 234 Cash payments (221 ) (14 ) (18 ) (4 ) (257 ) Non-cash items (23 ) (19 ) 2 (8 ) (48 ) Liability as of April 30, 2017 $ 231 $ 17 $ 31 $ 3 $ 282 Total costs incurred to date, as of April 30, 2017 $ 642 $ 86 $ 1,237 $ 222 $ 2,187 Total costs expected to be incurred, as of April 30, 2017 $ 850 $ 265 $ 1,237 $ 222 $ 2,574 The current restructuring liability reported in Accrued restructuring in the Condensed Consolidated Balance Sheets at April 30, 2017 and October 31, 2016 was $228 million and $301 million , respectively. The non-current restructuring liability reported in Other liabilities in the Condensed Consolidated Balance Sheets at April 30, 2017 and October 31, 2016 was $54 million and $52 million , respectively. Restructuring charges of $98 million and $74 million for the three months ended April 30, 2017 and 2016, respectively, and $159 million and $219 million for the six months ended April 30, 2017 and 2016, respectively, are included in Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings. 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 a result of the Everett Transaction, cost amounts and total headcount exits were revised. As such, as of April 30, 2017 , the Company now expects up to approximately 12,200 employees to exit the Company by the end of 2018, of which approximately 4,000 remain as of April 30, 2017 . 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 April 30, 2017 , the Company estimates that it will incur aggregate pre-tax charges of approximately $1.1 billion through fiscal 2018 in connection with the 2015 Plan, of which approximately $0.8 billion relates to workforce reductions and approximately $0.3 billion primarily relates to real estate consolidation and asset impairments. 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 a result of the Everett Transaction, cost amounts and total headcount exits were revised. As such, as of April 30, 2017, the Company had eliminated 12,700 positions, 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 April 30, 2017 , the plan is substantially complete, with no further positions being eliminated. The Company recognized $1.4 billion in total aggregate charges in connection with the 2012 Plan, with approximately $1.2 billion related to workforce reductions, including the EER programs, and approximately $0.2 billion 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 . |
Retirement and Post-Retirement
Retirement and Post-Retirement Benefit Plans | 6 Months Ended |
Apr. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement and Post-Retirement Benefit Plans | Retirement and Post-Retirement Benefit Plans Pension Benefit Expense The Company's total net pension benefit cost recognized in the Condensed Consolidated Statements of Earnings was $46 million and $41 million for the three months ended April 30, 2017 and 2016 , respectively, and $111 million and $70 million for the six months ended April 30, 2017 and 2016 , respectively. The amount for the three months ended April 30, 2017 includes a pre-tax benefit of $17 million resulting from remeasurements of certain Hewlett Packard Enterprise pension plans in association with the Everett Transaction, $16 million of which has been recorded within Defined benefit plan settlement charges and remeasurement (benefit) in the Condensed Consolidated Statement of Earnings, with the remainder recorded within discontinued operations. For the three months ended April 30, 2017, discontinued operations also includes incremental pre-tax pension expense of $23 million arising from the Everett Transaction. Three months ended April 30, Non-U.S. Defined Post-Retirement 2017 2016 2017 2016 In millions Service cost $ 30 $ 50 $ 1 $ 1 Interest cost 52 78 1 2 Expected return on plan assets (131 ) (161 ) — — Amortization and deferrals: Actuarial loss (gain) 64 54 (1 ) (1 ) Prior service benefit (4 ) (4 ) — — Net periodic benefit cost 11 17 1 2 Settlement loss 3 1 — — Special termination benefits 1 1 — — Plan expense allocation (5 ) (2 ) — — Net benefit cost from continuing operations 10 17 1 2 Summary of net benefit cost: Continuing operations 10 17 1 2 Discontinued operations 35 22 — — Net benefit cost $ 45 $ 39 $ 1 $ 2 Six months ended April 30, Non-U.S. Defined Post-Retirement 2017 2016 2017 2016 In millions Service cost $ 70 $ 100 $ 2 $ 2 Interest cost 102 158 2 4 Expected return on plan assets (264 ) (331 ) — (1 ) Amortization and deferrals: Actuarial loss (gain) 140 109 (2 ) (2 ) Prior service benefit (8 ) (9 ) — — Net periodic benefit cost 40 27 2 3 Settlement loss 3 1 — — Special termination benefits 2 3 — — Plan expense allocation (15 ) (4 ) (1 ) — Net benefit cost from continuing operations 30 27 1 3 Summary of net benefit cost: Continuing operations 30 27 1 3 Discontinued operations 79 40 1 — Net benefit cost $ 109 $ 67 $ 2 $ 3 Employer Contributions and Funding Policy 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. During the six months ended April 30, 2017 , the Company contributed approximately $2.1 billion to its non-U.S. pension plans, which includes a funding payment of approximately $1.9 billion associated with the Everett Transaction, and paid $1 million to cover benefit claims under the Company's post-retirement benefit plans. HPE previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2016, that excluding the above-mentioned pension funding payment related to the Everett Transaction, the Company expected to contribute approximately $348 million to its non-U.S. pension plans in fiscal 2017, approximately $2 million to cover benefit payments to its U.S. non-qualified plan participants and approximately $3 million to cover benefit claims for the Company's post-retirement benefit plans. As a result of the Everett Transaction, revisions to expected contributions for certain pension plans, and the impact of foreign currency, the Company’s expected fiscal 2017 contribution to its non-U.S. pension plans was reduced to approximately $299 million . During the remainder of fiscal 2017 , HPE now anticipates that it will make contributions of approximately $79 million to its non-U.S. pension plans, approximately $1 million to its U.S. non-qualified plan participants and approximately $2 million to cover benefit claims under the Company's post-retirement benefit plans. The Company's pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post-retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active and closed plans or the life expectancy of plan participants for frozen plans. During the first quarter of fiscal 2017, the Company changed its method used to estimate the service and interest cost components of net periodic benefit cost for defined benefit plans to a full yield curve approach with costs calculated at individual annual spot rates. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Apr. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In conjunction with the Separation, the Company adopted the Hewlett Packard Enterprise Company 2015 Stock Incentive Plan (the "Plan"). The Plan became effective on November 1, 2015. The total number of shares of the Company's common stock authorized under the Plan was 260 million . On January 25, 2017, the Company amended the Plan and reduced the authorized shares of common stock to 210 million shares. The Plan provides for the grant of various types of awards including restricted stock awards, stock options and performance-based awards. These awards generally vest over 3 years from the grant date. In connection with the Separation, the Company granted one-time retention stock awards, with a total grant date fair value of approximately $137 million to certain executives in the first quarter of fiscal 2016. These awards generally vest over 3 years from the grant date. Stock-Based Compensation Expense Stock-based compensation expense and the resulting tax benefits were as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Stock-based compensation expense from continuing operations $ 126 $ 103 $ 278 $ 230 Income tax benefit (41 ) (30 ) (89 ) (67 ) Stock-based compensation expense from continuing operations, net of tax $ 85 $ 73 $ 189 $ 163 Stock-based compensation expense from discontinued operations $ 78 $ 35 $ 100 $ 73 In May 2016, in connection with the announcement of the Everett Transaction, the Company modified its stock-based compensation program such that certain unvested equity awards outstanding on May 24, 2016 would 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 with HPE without cause; or (iii) June 1, 2018. This modification also included changes to the performance and market conditions of certain performance-based awards. The incremental expense arising from this modification was not material. Additionally, as a result of the accelerated vesting related to this modification, the Company incurred stock-based compensation expense of $83 million and $95 million during the three and six months ended April 30, 2017, respectively, of which $67 million and $69 million , respectively, was recorded in Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings. The remaining $16 million and $26 million arising from the modification for the three and six months ended April 30, 2017, respectively, has been recorded within Separation costs in the Condensed Consolidated Statements of Earnings. In addition, in connection with the Everett Transaction and in accordance with the Employee Matters Agreement, HPE made certain post-spin adjustments to the exercise price and number of stock-based compensation awards with the intention of preserving the intrinsic value of the awards prior to the close of the transaction. The incremental expense incurred by the Company was not material. For the three and six months ended April 30, 2017 , stock-based compensation expense in the table above includes pre-tax expense of $21 million and $33 million , respectively, which has been recorded within Separation costs, $7 million and $19 million , respectively, related to workforce reductions, which has been recorded within Restructuring charges, and $2 million and $7 million , respectively, related to the acquisition of Silicon Graphics International Corp. ("SGI"), which has been recorded within Acquisition and other related charges in the Condensed Consolidated Statements of Earnings. Restricted Stock Units 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 units 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 units ratably over the period during which the restrictions lapse. A summary of restricted stock unit activity is as follows: Six Months Ended Shares Weighted-Average Grant Date Fair Value Per Share In thousands Outstanding at beginning of period 57,321 $ 15 Granted and assumed through acquisition (1) 21,405 $ 21 Additional shares granted due to conversion (2) 12,902 $ 18 Vested (3) (36,473 ) $ 16 Forfeited/canceled (4) (2,079 ) $ 17 Outstanding at end of period 53,076 $ 18 (1) Includes approximately 11 million restricted stock units assumed by the Company through acquisition with a weighted-average grant date fair value of $18 per share. (2) Additional shares granted as a result of the post-spin exercise price adjustments made related to the Everett Transaction, in order to preserve the intrinsic value of the awards prior to the close of the transaction. (3) Includes approximately 9 million restricted stock units, with a weighted-average grant date fair value of $18 per share, which were accelerated as part of the Everett Transaction. (4) Includes approximately 0.3 million restricted stock units, with a weighted-average grant date fair value of $18 per share, related to the former ES segment, which were canceled by HPE and assumed by DXC in connection with the Everett Transaction and in accordance with the Employee Matters Agreement. At April 30, 2017 , there was $524 million of unrecognized pre-tax stock-based compensation expense related to unvested restricted stock units, which the Company expects to recognize over the remaining weighted-average vesting period of 1.6 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. 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 performance-contingent stock options that vest only on the satisfaction of both service and market conditions. The Company utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The Company estimates 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: Six Months Ended Weighted-average fair value (1) $ 6 Expected volatility (2) 25.7 % Risk-free interest rate (3) 2.0 % Expected dividend yield (4) 1.0 % Expected term in years (5) 6.1 (1) The weighted-average fair value was based on the fair value of stock options granted during the period. There were no stock options granted during the three months ended April 30, 2017. (2) The expected volatility was estimated using the average historical volatility of selected peer companies. (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 award. (5) For awards subject to service-based vesting, the expected term was estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 110, for performance-contingent awards the expected term represents an output from the lattice model. A summary of stock option activity is as follows: Six months ended April 30, 2017 Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value In thousands In years In millions Outstanding at beginning of period 57,498 $ 15 Granted and assumed through acquisition 5,242 $ 24 Additional shares granted due to conversion (1) 12,574 $ 12 Exercised (16,281 ) $ 14 Forfeited/canceled/expired (2) (8,389 ) $ 16 Outstanding at end of period (3) 50,644 $ 12 5.0 $ 329 Vested and expected to vest at end of period (3) 49,682 $ 12 5.0 $ 324 Exercisable at end of period (3) 28,811 $ 11 3.7 $ 224 (1) Additional shares granted as a result of the post-spin exercise price adjustments made related to the Everett Transaction, in order to preserve the intrinsic value of the awards prior to the close of the transaction. (2) Includes approximately 8 million stock options, with a weighted-average exercise price of $16 per share, related to the former ES segment, which were canceled by HPE and assumed by DXC in connection with the Everett Transaction and in accordance with the Employee Matters Agreement. (3) The weighted average exercise price reflects the impact of the post-spin adjustment to the exercise price related to the Everett Transaction. The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have realized had all option holders exercised their options on the last trading day of the second quarter of fiscal 2017. The aggregate intrinsic value is the difference between the Company's closing common stock price on the last trading day of the second quarter of fiscal 2017 and the exercise price, multiplied by the number of in-the-money options. The total intrinsic value of options exercised for the three and six months ended April 30, 2017 was $47 million and $120 million , respectively. At April 30, 2017 , there was $ 53 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 1.4 years . Employee Stock Purchase Plan Effective November 1, 2015, the Company adopted the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan ("ESPP"). The total number of shares of Company's common stock authorized under the ESPP was 80 million . 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 of 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. |
Taxes on Earnings
Taxes on Earnings | 6 Months Ended |
Apr. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Taxes on Earnings | Taxes on Earnings Provision for Taxes The Company's effective tax rate was 582.2% and 2.4% for the three months ended April 30, 2017 and 2016 , respectively, and 152.8% and 7.9% for the six months ended April 30, 2017 and 2016 , respectively. During the second quarter of fiscal 2017, as a result of the Everett Transaction, the Company recorded valuation allowances of $473 million on U.S. state deferred tax assets and $110 million of other taxes, which had an unfavorable impact on the Company's tax rates for the three and six months ended April 30, 2017 . The Company's effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with certain earnings from the Company's operations in lower-tax jurisdictions throughout the world. The Company has not provided U.S. taxes for all foreign earnings because it plans to reinvest some of those earnings indefinitely outside the U.S. For the three and six months ended April 30, 2017 , the Company recorded $506 million and $471 million of net income tax charges, respectively, related to various items discrete to the period. In the second quarter of fiscal 2017, the Company recorded income tax charges of $473 million from valuation allowances on U.S. state deferred tax assets and $110 million of other taxes related to the Everett Transaction, partially offset by income tax benefits of $79 million and $141 million for the three and six months ended April 30, 2017 , respectively, on restructuring charges, separation costs and acquisition and other related charges. For the three and six months ended April 30, 2016 , the Company recorded $92 million and $174 million , respectively, of net income tax benefits related to various items discrete to the period. These amounts primarily included tax benefits on restructuring charges, separation costs, acquisition and other related charges and tax matters related to the separation from former Parent. Uncertain Tax Positions The Company 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. In addition, former Parent, whose liabilities for which the Company is jointly and severally liable, is subject to numerous ongoing audits by federal, state and foreign tax authorities. The Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. 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 income or cash flows. As of April 30, 2017 and October 31, 2016 , the amount of unrecognized tax benefits was $11.5 billion and $11.4 billion , respectively, of which up to $3.0 billion and $2.9 billion would affect the Company's effective tax rate if realized as of their respective periods. The Company recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Provision for taxes in the Condensed Consolidated Statements of Earnings. As of April 30, 2017 and October 31, 2016 , the Company recorded $403 million and $394 million , respectively, for interest and penalties in the Condensed Consolidated Balance Sheets. The Company engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HPE 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 issues involving transfer pricing, joint and several tax liabilities related to the separation from former Parent and other matters. Accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $2.7 billion within the next 12 months . Deferred Tax Assets and Liabilities Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 October 31, 2016 In millions Deferred tax assets - long-term $ 3,491 $ 3,830 Deferred tax liabilities - long-term (83 ) (98 ) Deferred tax assets net of deferred tax liabilities $ 3,408 $ 3,732 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 $439 million during fiscal 2017 and $3.7 billion during fiscal 2016. 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. 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. In connection with the Everett Transaction, the Company entered into a DXC Tax Matters Agreement with DXC. See Note 19, "Guarantees, Indemnifications and Warranties", for a full description of the Tax Matters Agreement and the DXC Tax Matters Agreement. |
Balance Sheet Details
Balance Sheet Details | 6 Months Ended |
Apr. 30, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Details | Balance Sheet Details Balance sheet details were as follows: Accounts Receivable, Net As of April 30, 2017 October 31, 2016 In millions Accounts receivable, billed $ 3,585 $ 3,681 Unbilled receivable 267 191 Accounts receivable, gross 3,852 3,872 Allowance for doubtful accounts (42 ) (56 ) Total $ 3,810 $ 3,816 The allowance for doubtful accounts related to accounts receivable and changes to the allowance were as follows: Six Months Ended In millions Balance at beginning of year $ 56 Deductions, net of recoveries (14 ) Balance at end of period $ 42 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 April 30, 2017 and October 31, 2016 were not material. The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows: Six Months Ended In millions Balance at beginning of year (1) $ 145 Trade receivables sold 1,541 Cash receipts (1,624 ) Foreign currency and other (1 ) Balance at end of period (1) $ 61 (1) Beginning and ending balances represent amounts for trade receivables sold, but not yet collected. Inventory As of April 30, 2017 October 31, 2016 In millions Finished goods $ 1,218 $ 1,182 Purchased parts and fabricated assemblies 823 558 Total $ 2,041 $ 1,740 For the six months ended April 30, 2017 , the increase in Inventory was due primarily to $118 million of inventory added as a result of acquisitions, primarily SGI and Nimble Storage, Inc. ("Nimble"), and higher memory component inventory due to price increases arising from supply constraints. Other Current Assets As of April 30, 2017 October 31, 2016 In millions Value-added taxes receivable $ 673 $ 762 Manufacturer and other receivables 1,055 1,010 Prepaid and other current assets 1,364 999 Total $ 3,092 $ 2,771 Property, Plant and Equipment As of April 30, 2017 October 31, 2016 In millions Land $ 313 $ 353 Buildings and leasehold improvements 2,689 3,547 Machinery and equipment, including equipment held for lease 9,736 9,024 12,738 12,924 Accumulated depreciation (6,046 ) (6,620 ) Total $ 6,692 $ 6,304 For the six months ended April 30, 2017 , the change in gross property, plant and equipment was due primarily to $1,490 million of purchases and $252 million of additions resulting from the SGI, Nimble, and SimpliVity acquisitions, which was partially offset by $1,928 million of sales and retirements and other activity. Accumulated depreciation associated with the assets sold and retired was $1,074 million . Long-Term Financing Receivables and Other Assets As of April 30, 2017 October 31, 2016 In millions Financing receivables, net $ 3,953 $ 4,584 Deferred tax assets 3,491 3,830 Prepaid pension assets 577 365 Other 2,826 2,796 Total $ 10,847 $ 11,575 For the six months ended April 30, 2017 , the change in Long-term financing receivables and other assets was due primarily to a decrease in Financing receivables, net, due primarily to the conversion of capital leases to operating leases in connection with the Everett Transaction. Other Accrued Liabilities As of April 30, 2017 October 31, 2016 In millions Accrued taxes - other $ 830 $ 866 Warranty - short-term 274 258 Sales and marketing programs 764 853 Other 2,505 1,880 Total $ 4,373 $ 3,857 Other Liabilities As of April 30, 2017 October 31, 2016 In millions Pension, post-retirement and post-employment liabilities $ 1,779 $ 2,101 Deferred revenue - long-term 2,624 2,485 Tax liability - long-term 3,518 3,950 Other long-term liabilities 1,020 865 Total $ 8,941 $ 9,401 |
Financing Receivables and Opera
Financing Receivables and Operating Leases | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 October 31, 2016 In millions Minimum lease payments receivable $ 7,615 $ 8,480 Unguaranteed residual value 242 231 Unearned income (595 ) (678 ) Financing receivables, gross 7,262 8,033 Allowance for doubtful accounts (80 ) (89 ) Financing receivables, net 7,182 7,944 Less: current portion (1) (3,229 ) (3,360 ) Amounts due after one year, net (1) $ 3,953 $ 4,584 (1) The Company includes the current portion in Financing receivables, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets. During the second quarter of fiscal 2017, in connection with the Everett Transaction, the Company converted certain capital lease arrangements with the former ES segment to operating lease assets held by FS. The decrease in financing receivables during the six months ended April 30, 2017 in the table above is due primarily to this conversion of capital leases to operating leases. Sale of Financing Receivables During the three and six months ended April 30, 2017 and 2016 , the Company entered into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions, which are accounted for as sales in accordance with ASC 860 - Transfers and Servicing. The Company derecognizes the carrying value of the receivable transferred and recognizes a net gain or loss on the sale. During the six months ended April 30, 2017 and 2016 , the Company sold $95 million and $67 million , respectively, of financing receivables; cash was collected in full at the time of sale. The gains recognized on the sales of financing receivables were not material for the periods presented. Credit Quality Indicators Due to the homogeneous 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 upon internal risk ratings, was as follows: As of April 30, 2017 October 31, 2016 In millions Risk Rating: Low $ 3,826 $ 4,027 Moderate 3,337 3,909 High 99 97 Total $ 7,262 $ 8,033 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 for financing receivables as of April 30, 2017 and October 31, 2016 and the respective changes during the six and twelve months then ended were as follows: As of April 30, 2017 October 31, 2016 In millions Balance at beginning of period $ 89 $ 95 Provision for doubtful accounts 8 11 Write-offs (17 ) (17 ) Balance at end of period $ 80 $ 89 The gross financing receivables and related allowance evaluated for loss were as follows: As of April 30, 2017 October 31, 2016 In millions Gross financing receivables collectively evaluated for loss $ 6,974 $ 7,750 Gross financing receivables individually evaluated for loss 288 283 Total $ 7,262 $ 8,033 Allowance for financing receivables collectively evaluated for loss $ 62 $ 73 Allowance for financing receivables individually evaluated for loss 18 16 Total $ 80 $ 89 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 the suspension of interest accrual, and considers such receivables to be non-performing at the earlier of the time at which full payment of principal and interest becomes doubtful or the receivable becomes 90 days past due. Subsequently, the Company may recognize revenue on non-accrual financing receivables as payments are received, which is on a cash basis, if the Company deems the recorded financing receivable to be fully collectible; 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 April 30, 2017 October 31, 2016 In millions Billed: (1) Current 1-30 days $ 311 $ 389 Past due 31-60 days 34 54 Past due 61-90 days 36 14 Past due > 90 days 55 68 Unbilled sales-type and direct-financing lease receivables 6,826 7,508 Total gross financing receivables $ 7,262 $ 8,033 Gross financing receivables on non-accrual status (2) $ 181 $ 163 Gross financing receivables 90 days past due and still accruing interest (2) $ 107 $ 120 (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 Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 October 31, 2016 In millions Equipment leased to customers $ 7,593 $ 5,467 Accumulated depreciation (2,900 ) (2,134 ) Total $ 4,693 $ 3,333 The increase in operating lease assets during the six months ended April 30, 2017 is primarily a result of the Everett Transaction, as operating leases held with the former ES segment were treated as intercompany leases until the close of the transaction. As of April 1, 2017, these leases became third party leases held with DXC. |
Acquisitions
Acquisitions | 6 Months Ended |
Apr. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisitions During the first six months of fiscal 2017 , the Company completed five acquisitions. The purchase price allocation for these acquisitions as set forth in the table below reflects various preliminary fair value estimates and analysis, including preliminary work performed by third-party valuation specialists, certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and income based taxes, and residual goodwill, which are subject to change within the measurement period as valuations are finalized. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. Pro forma results of operations for these acquisitions have not been presented because they are not material to the Company's consolidated results of operations, either individually or in the aggregate. Goodwill, which represents the excess of the purchase price over the net tangible and intangible assets acquired, is not deductible for tax purposes. The following table presents the aggregate purchase price allocation, including those items that are still preliminary allocations, for the Company's acquisitions for the six months ended April 30, 2017: In millions Goodwill $ 1,323 Amortizable intangible assets 579 In-process research and development 85 Net assets assumed 319 Total fair value consideration $ 2,306 On April 17, 2017, the Company completed the acquisition of Nimble Storage, Inc., a provider of predictive all-flash and hybrid-flash storage solutions. Nimble's results of operations are included within the Enterprise Group segment. The acquisition date fair value consideration of $1.3 billion primarily 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 $787 million of goodwill, $288 million of intangible assets, and $30 million of in-process research and development. The Company will amortize the intangible assets on a straight-line basis over an estimated weighted-average useful life of five years. On February 17, 2017, the Company completed the acquisition of SimpliVity, a provider of software-defined, hyperconverged infrastructure. SimpliVity's results of operations are included within the Enterprise Group segment. The acquisition date fair value consideration of $651 million primarily consisted of cash paid for outstanding common stock, debt, and the estimated fair value of earned unvested stock awards assumed by the Company. In connection with this acquisition, the Company recorded approximately $430 million of goodwill, $116 million of intangible assets, and $25 million of in-process research and development. The Company will amortize the intangible assets on a straight-line basis over an estimated weighted-average useful life of five years. On November 1, 2016, the Company completed the acquisition of SGI, a provider of high-performance solutions for computer data analytics and data management. SGI's results of operations are included within the Enterprise Group segment. The acquisition date fair value consideration of $349 million consisted of cash paid for outstanding common stock, debt, and the estimated fair value of earned unvested stock awards assumed by the Company. In connection with this acquisition, the Company recorded approximately $74 million of goodwill, $150 million of intangible assets, and $30 million of in-process research and development. The Company will amortize the intangible assets on a straight-line basis over an estimated weighted-average useful life of five years. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Apr. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill allocated to the Company's reportable segments as of April 30, 2017 and changes in the respective carrying amounts during the six months then ended were as follows: Enterprise Group Software Financial Services Total In millions Balance at October 31, 2016 $ 15,945 $ 8,089 $ 144 $ 24,178 Goodwill acquired during the period 1,323 — — 1,323 Changes due to foreign currency (1 ) — — (1 ) Goodwill adjustments (2 ) — — (2 ) Balance at April 30, 2017 $ 17,265 $ 8,089 $ 144 $ 25,498 Goodwill is tested for impairment at the reporting unit level. As of April 30, 2017 , the Company's reporting units are consistent with the reportable segments identified in Note 3, "Segment Information". The Company will continue to evaluate the recoverability of goodwill on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment. Intangible Assets The Company's intangible assets are composed of: As of April 30, 2017 As of October 31, 2016 Gross Accumulated Amortization Accumulated Impairment Loss Net Gross Accumulated Amortization Accumulated Impairment Loss Net In millions Customer contracts, customer lists and distribution agreements $ 1,488 $ (305 ) $ (856 ) $ 327 $ 1,394 $ (322 ) $ (856 ) $ 216 Developed and core technology and patents 4,565 (1,378 ) (2,138 ) 1,049 4,190 (1,232 ) (2,138 ) 820 Trade name and trademarks 215 (27 ) (109 ) 79 178 (21 ) (109 ) 48 In-process research and development 85 — — 85 — — — — Total intangible assets $ 6,353 $ (1,710 ) $ (3,103 ) $ 1,540 $ 5,762 $ (1,575 ) $ (3,103 ) $ 1,084 The increase in gross intangible assets during the first six months of fiscal 2017 was due to the addition of $579 million of intangible assets and $85 million of in-process research and development in connection with acquisitions completed during the period. This increase was partially offset by $73 million of intangible assets which became fully amortized and have been eliminated from gross intangible assets and accumulated amortization. Intangible asset amortization expense for the three months ended April 30, 2017 and 2016 was $107 million and $101 million , respectively, and for the six months ended April 30, 2017 and 2016 was $208 million and $220 million , respectively. In-process research and development consists of efforts that are in process on the date the Company acquires a business. 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 Condensed Consolidated Statement of Earnings in the period of abandonment. No in-process research and development projects were completed or abandoned during the six months ended April 30, 2017 . As of April 30, 2017 , estimated future amortization expense related to finite-lived intangible assets was as follows: Fiscal year: In millions 2017 (remaining 6 months) $ 243 2018 383 2019 306 2020 248 2021 106 2022 78 Thereafter 91 Total $ 1,455 |
Fair Value
Fair Value | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 As of October 31, 2016 Fair Value Measured Using Fair Value Measured Using Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets Cash Equivalents and Investments: Time deposits $ — $ 2,446 $ — $ 2,446 $ — $ 4,035 $ — $ 4,035 Money market funds 2,845 — — 2,845 6,495 — — 6,495 Equity securities in public companies 21 — — 21 16 — — 16 Foreign bonds 8 214 — 222 — 180 — 180 Other debt securities — — 27 27 — — 28 28 Derivative Instruments: Interest rate contracts — — — — — 109 — 109 Foreign exchange contracts — 433 — 433 — 611 — 611 Other derivatives — 2 — 2 — — — — Total assets $ 2,874 $ 3,095 $ 27 $ 5,996 $ 6,511 $ 4,935 $ 28 $ 11,474 Liabilities Derivative Instruments: Interest rate contracts $ — $ 122 $ — $ 122 $ — $ 6 $ — $ 6 Foreign exchange contracts — 265 — 265 — 211 — 211 Other derivatives — — — — — 2 — 2 Total liabilities $ — $ 387 $ — $ 387 $ — $ 219 $ — $ 219 During the six months ended April 30, 2017 , there were no transfers between levels within the fair value hierarchy. Valuation Techniques Cash Equivalents and Investments: The Company holds time deposits, money market 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 13, "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 Condensed 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 April 30, 2017 , the estimated fair value of the Company's short-term and long-term debt was $14.0 billion and the carrying value was $13.9 billion . At October 31, 2016 , the estimated fair value of the Company's short-term and long-term debt was $15.8 billion and the carrying value was $15.7 billion . If measured at fair value in the Condensed Consolidated Balance Sheets, short-term and long-term debt would be classified as Level 2 in 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 periods of time to maturity. If measured at fair value in the Condensed Consolidated Balance Sheets, these other financial instruments would be classified as Level 2 or Level 3 in 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 Condensed Consolidated Balance Sheets, these would generally be classified as Level 3 in the fair value hierarchy. |
Financial Instruments
Financial Instruments | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 As of October 31, 2016 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Time deposits $ 2,435 $ — $ — $ 2,435 $ 4,024 $ — $ — $ 4,024 Money market funds 2,845 — — 2,845 6,495 — — 6,495 Total cash equivalents 5,280 — — 5,280 10,519 — — 10,519 Available-for-Sale Investments: Debt securities: Time deposits 11 — — 11 11 — — 11 Foreign bonds 184 38 — 222 131 49 — 180 Other debt securities 39 — (12 ) 27 40 — (12 ) 28 Total debt securities 234 38 (12 ) 260 182 49 (12 ) 219 Equity securities: Equity securities in public companies 20 1 — 21 20 — (4 ) 16 Total equity securities 20 1 — 21 20 — (4 ) 16 Total available-for-sale investments 254 39 (12 ) 281 202 49 (16 ) 235 Total cash equivalents and available-for-sale investments $ 5,534 $ 39 $ (12 ) $ 5,561 $ 10,721 $ 49 $ (16 ) $ 10,754 All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents. As of April 30, 2017 and October 31, 2016 , the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. Time deposits were primarily issued by institutions outside the U.S. as of April 30, 2017 and October 31, 2016 . 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 both April 30, 2017 and October 31, 2016 was due primarily to a decline in the fair value of a debt security of $12 million , which 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: April 30, 2017 Amortized Cost Fair Value In millions Due in more than five years $ 234 $ 260 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 Condensed Consolidated Balance Sheets. These investments amounted to $145 million and $128 million at April 30, 2017 and October 31, 2016 , respectively. Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Condensed Consolidated Balance Sheets. These investments amounted to $2.6 billion at both April 30, 2017 and October 31, 2016 . For further details, see Note 20, "Equity Method Investments". Derivative Instruments Hewlett Packard Enterprise 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 Condensed Consolidated Balance Sheets. The change in fair value of the derivative instruments is recognized in the Condensed Consolidated Statements of Earnings or Condensed Consolidated 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 Condensed Consolidated 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 allow 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 $137 million and $9 million at April 30, 2017 and October 31, 2016 , 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 April 30, 2017 and October 31, 2016 . 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. 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 Condensed Consolidated 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 Condensed 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 Condensed 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 Condensed Consolidated 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 Condensed Consolidated Statements of Earnings in the same period in which ineffectiveness occurs. Amounts excluded from the assessment of effectiveness are recognized in the Condensed Consolidated Statements of Earnings in the period they arise. Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 As of October 31, 2016 Fair Value Fair Value Outstanding Gross Notional Other Current Assets Long-Term Financing Receivables and Other Assets Other Accrued Liabilities Long-Term Other Liabilities Outstanding Gross Notional Other Current Assets Long-Term Financing Receivables and Other Assets Other Accrued Liabilities Long-Term Other Liabilities In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 9,500 $ — $ — $ — $ 122 $ 9,500 $ — $ 109 $ — $ 6 Cash flow hedges: Foreign currency contracts 7,483 159 91 79 25 6,450 247 172 31 15 Net investment hedges: Foreign currency contracts 1,932 40 21 34 37 1,891 53 28 23 28 Total derivatives designated as hedging instruments 18,915 199 112 113 184 17,841 300 309 54 49 Derivatives not designated as hedging instruments Foreign currency contracts 9,472 120 2 86 4 16,496 100 11 103 11 Other derivatives 102 2 — — — 135 — — 2 — Total derivatives not designated as hedging instruments 9,574 122 2 86 4 16,631 100 11 105 11 Total derivatives $ 28,489 $ 321 $ 114 $ 199 $ 188 $ 34,472 $ 400 $ 320 $ 159 $ 60 Offsetting of Derivative Instruments The Company recognizes all derivative instruments on a gross basis in the Condensed 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 April 30, 2017 and October 31, 2016 , 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 April 30, 2017 In the Condensed Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Not Offset Gross Amount Recognized Gross Amount Offset Net Amount Presented Derivatives Financial Collateral Net Amount In millions Derivative assets $ 435 $ — $ 435 $ 247 $ 141 (1) $ 47 Derivative liabilities $ 387 $ — $ 387 $ 247 $ 177 (2) $ (37 ) As of October 31, 2016 In the Condensed Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Not Offset Gross Amount Recognized Gross Amount Offset Net Amount Presented Derivatives Financial Collateral Net Amount In millions Derivative assets $ 720 $ — $ 720 $ 207 $ 465 (1) $ 48 Derivative liabilities $ 219 $ — $ 219 $ 207 $ 10 (3) $ 2 (1) Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2) Represents the collateral posted by the Company in cash 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. The amount includes $226 million of cash collateral posted, net of $49 million of cash collateral returned. (3) 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 Condensed Consolidated Statements of Earnings The pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship for the six months ended April 30, 2017 and 2016 were as follows: Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended April 30, 2017 Six months ended April 30, 2017 Hedged Item Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions In millions Interest rate contracts Interest and other, net $ 37 $ (225 ) Fixed-rate debt Interest and other, net $ (37 ) $ 225 Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended April 30, 2016 Six months ended April 30, 2016 Hedged Item Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions In millions Interest rate contracts Interest and other, net $ 34 $ 167 Fixed-rate debt Interest and other, net $ (34 ) $ (167 ) The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2017 were as follows: Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended April 30, 2017 Six months ended April 30, 2017 Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions In millions Cash flow hedges: Foreign currency contracts $ (56 ) $ (1 ) Net revenue $ 2 $ 58 Foreign currency contracts (1 ) (1 ) Cost of products — — Foreign currency contracts 1 1 Other operating expenses — — Foreign currency contracts 66 142 Interest and other, net 66 149 Subtotal 10 141 Net earnings (loss) from continuing operations 68 207 Foreign currency contracts (6 ) (1 ) Net loss from discontinued operations 15 39 Total cash flow hedges $ 4 $ 140 Total $ 83 $ 246 Net investment hedges: Foreign currency contracts $ (8 ) $ (10 ) Interest and other, net $ — $ — Subtotal (8 ) (10 ) Net earnings (loss) from continuing operations — — Foreign currency contracts — — Net loss from discontinued operations — — Total $ (8 ) $ (10 ) Total $ — $ — The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2016 was as follows: Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended April 30, 2016 Six months ended April 30, 2016 Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions In millions Cash flow hedges: Foreign currency contracts $ (192 ) $ (153 ) Net revenue $ (13 ) $ 28 Foreign currency contracts 3 2 Other operating expenses — — Foreign currency contracts 61 119 Interest and other, net 66 125 Subtotal (128 ) (32 ) Net earnings (loss) from continuing operations 53 153 Foreign currency contracts (78 ) (32 ) Net loss from discontinued operations 17 38 Total cash flow hedges $ (206 ) $ (64 ) Total $ 70 $ 191 Net investment hedges: Foreign currency contracts $ (137 ) $ (80 ) Interest and other, net $ — $ — Subtotal (137 ) (80 ) Net earnings (loss) from continuing operations — — Foreign currency contracts — — Net loss from discontinued operations — — Total $ (137 ) $ (80 ) Total $ — $ — As of April 30, 2017 and 2016 , no portion of the hedging instruments' gain or loss was excluded from the assessment of effectiveness for fair value, cash flow or net investment hedges. Hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for the six months ended April 30, 2017 and 2016 . As of April 30, 2017 , the Company expects to reclassify an estimated net Accumulated other comprehensive loss of approximately $47 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 Condensed Consolidated Statements of Earnings for the three and six months ended April 30, 2017 and 2016 was as follows: Gains (Losses) Recognized in Earnings on Derivatives Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions Foreign currency contracts Interest and other, net $ (199 ) $ (246 ) Other derivatives Interest and other, net 1 4 Total $ (198 ) $ (242 ) Gains (Losses) Recognized in Earnings on Derivatives Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions Foreign currency contracts Interest and other, net $ (331 ) $ (323 ) Other derivatives Interest and other, net 5 — Total $ (326 ) $ (323 ) |
Borrowings
Borrowings | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 October 31, 2016 Amount Outstanding Weighted-Average Interest Rate Amount Outstanding Weighted-Average Interest Rate Dollars in millions Current portion of long-term debt $ 1,217 2.6 % $ 2,772 1.7 % FS Commercial paper 343 — % 326 0.1 % Notes payable to banks, lines of credit and other (1) 450 2.2 % 429 2.0 % Total notes payable and short-term borrowings $ 2,010 $ 3,527 (1) Notes payable to banks, lines of credit and other includes $404 million and $381 million at April 30, 2017 and October 31, 2016 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries. Long-Term Debt As of April 30, 2017 October 31, 2016 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 $ 750 $ 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 2,648 $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 1,348 $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 2,494 $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 750 750 $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 Other, including capital lease obligations, at 0.00%-6.05%, due in calendar years 2017-2021 (2) 202 300 Fair value adjustment related to hedged debt (122 ) 103 Unamortized debt issuance costs (3) (47 ) (50 ) Less: current portion (1,217 ) (2,772 ) Total long-term debt $ 11,904 $ 12,168 (1) The Company may redeem some or all of the fixed-rate Hewlett Packard Enterprise Senior Notes at any time in accordance with the terms thereof. (2) Other, including capital lease obligations includes $136 million and $181 million as of April 30, 2017 and October 31, 2016 , 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. (3) In April 2015, the FASB issued ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. During the first quarter of fiscal 2017, the Company adopted the standard retrospectively for the prior period presented. As disclosed in Note 13, "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 expense. As of April 30, 2017 , the Company had 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 expense. Interest rates on long-term debt in the table above have not been adjusted to reflect the impact of any interest rate swaps. Interest expense on borrowings recognized in the Condensed Consolidated Statements of Earnings was as follows: Three months ended April 30, Six months ended April 30, Expense Location 2017 2016 2017 2016 In millions Financing interest Financing interest $ 65 $ 61 $ 131 $ 119 Interest expense Interest and other, net 77 79 169 152 Total interest expense $ 142 $ 140 $ 300 $ 271 Available Borrowing Resources The Company had the following resources available to obtain short- or long-term additional liquidity if needed: As of April 30, 2017 In millions Commercial paper programs $ 4,157 Uncommitted lines of credit $ 1,802 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. Everett Financing In connection with the Everett Transaction, Everett borrowed an aggregate principal amount of approximately $3.5 billion which consisted of a term loan facility in the principal amount of $2.0 billion and Senior Notes in the principal amount of $1.5 billion . The proceeds from these arrangements were used to fund a $3.0 billion cash dividend payment from Everett to Hewlett Packard Enterprise and the remaining approximately $0.5 billion was retained by Everett. The obligations under these borrowing arrangements were retained by Everett. On April 28, 2017, the Company used a portion of the $3.0 billion cash dividend received from Everett to redeem $1.5 billion face value of the $2.25 billion Senior Notes with an original maturity date of October 5, 2017. A proportional amount of unamortized discount and debt issuance costs have been allocated to the retired debt. These costs, along with the redemption price of $1.508 billion resulted in an immaterial loss. |
Related Party Transactions and
Related Party Transactions and Former Parent Company Investment | 6 Months Ended |
Apr. 30, 2017 | |
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. Net Transfers from former Parent 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 Condensed Consolidated Statements of Cash Flows. Transactions with DXC On April 1, 2017, HPE completed the Everett Transaction. As a result, transactions with DXC are no longer considered related party transactions. For further information, see Note 2, “Discontinued Operations”. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Apr. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders' Equity Change in HPE's Stockholders' equity The following table presents changes in Total stockholders' equity for the six months ended April 30, 2017. In millions Balance as of October 31, 2016 $ 31,518 Everett Transaction (1) (1,349 ) Net loss (2) (349 ) Other comprehensive income, net of taxes 476 Comprehensive income 127 127 Repurchase of common stock (1,350 ) Cash dividends declared (324 ) Stock-based compensation expense (3) 378 Other (4) 47 Balance as of April 30, 2017 $ 29,047 (1) Includes retained earnings of $3.9 billion and non-controlling interest of $30 million , reduced by accumulated other comprehensive loss of $2.6 billion . (2) Includes net loss of $345 million and net loss attributable to non-controlling interests of $4 million . (3) Includes unallocated stock-based compensation expense of $219 million , stock-based compensation expense included in Net loss from discontinued operations of $100 million , stock-based compensation expense included in Separation costs of $33 million , stock-based compensation expense related to workforce reductions included in Restructuring charges of $19 million , and stock-based compensation expense related to the acquisition of SGI recorded within Acquisition and other related charges of $7 million . (4) Other primarily includes shares acquired through business acquisitions, shares issued through the employee stock purchase program, exercise of options, and shares canceled, net of related tax benefits. Taxes related to Other Comprehensive Income (Loss) Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions Taxes on change in net unrealized (losses) gains on available-for-sale securities: Tax provision on net unrealized (losses) gains arising during the period $ — $ (2 ) $ (1 ) $ (1 ) Tax provision (benefit) on (gains) losses reclassified into earnings — 1 — (2 ) — (1 ) (1 ) (3 ) Taxes on change in net unrealized losses on cash flow hedges: Tax benefit (provision) on net unrealized gains (losses) arising during the period 4 46 (27 ) 31 Tax provision on net gains reclassified into earnings 13 6 45 25 17 52 18 56 Taxes on change in unrealized components of defined benefit plans: Tax provision on gains (losses) arising during the period (1 ) — (25 ) — Tax benefit on amortization of actuarial loss and prior service benefit (5 ) (5 ) (11 ) (10 ) Tax provision on curtailments, settlements and other (7 ) (11 ) (14 ) (12 ) (13 ) (16 ) (50 ) (22 ) Tax benefit on change in cumulative translation adjustment — 42 1 22 Tax benefit (provision) on other comprehensive income $ 4 $ 77 $ (32 ) $ 53 Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions Other comprehensive income (loss), net of taxes: Change in net unrealized (losses) gains on available-for-sale securities: Net unrealized (losses) gains arising during the period $ (4 ) $ — $ (18 ) $ 3 (Gains) losses reclassified into earnings — (4 ) — 2 (4 ) (4 ) (18 ) 5 Change in net unrealized losses on cash flow hedges: Net unrealized gains (losses) arising during the period 8 (160 ) 113 (33 ) Net gains reclassified into earnings (1) (70 ) (64 ) (201 ) (166 ) (62 ) (224 ) (88 ) (199 ) Change in unrealized components of defined benefit plans: Gains (losses) arising during the period 10 (1 ) 465 (1 ) Amortization of actuarial loss and prior service benefit (2) 72 65 163 132 Curtailments, settlements and other (4 ) (10 ) (11 ) (29 ) 78 54 617 102 Change in cumulative translation adjustment (11 ) 99 (35 ) (60 ) Other comprehensive income (loss), net of taxes $ 1 $ (75 ) $ 476 $ (152 ) (1) For more details on the reclassification of pre-tax net (gains) losses on cash flow hedges into the Condensed Consolidated Statements of Earnings, see Note 13, "Financial Instruments". (2) These components are included in the computation of net pension and post-retirement benefit (credit) cost in Note 5, "Retirement and Post-Retirement Benefit Plans." The components of Accumulated other comprehensive loss, net of taxes as of April 30, 2017 , and changes during the six months ended April 30, 2017 were as follows: Net unrealized gains (losses) on available-for-sale securities Net unrealized gains (losses) on cash flow hedges Unrealized components of defined benefit plans Cumulative translation adjustment Accumulated other comprehensive loss In millions Balance at beginning of period $ 54 $ 35 $ (5,642 ) $ (1,046 ) $ (6,599 ) Transfer related to the Everett Transaction (9 ) — 1,820 768 2,579 Other comprehensive (loss) income before reclassifications (18 ) 113 465 (35 ) 525 Reclassifications of (gains) loss into earnings — (201 ) 152 — (49 ) Balance at end of period $ 27 $ (53 ) $ (3,205 ) $ (313 ) $ (3,544 ) Share Repurchase Program On October 13, 2015, the Hewlett Packard Enterprise Board of Directors 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. For the six months ended April 30, 2017 , the Company retired a total of 59 million shares in connection with its share repurchase programs through open market repurchases, which were recorded as a $1.3 billion reduction to stockholders' equity. Additionally, for the six months ended April 30, 2017 , the Company had unsettled open market repurchases of 2.1 million shares, which were recorded as a $39 million reduction to stockholders' equity. As of April 30, 2017 , the Company had a remaining authorization of $2.0 billion for future share repurchases. |
Net Earnings (Loss) Per Share
Net Earnings (Loss) Per Share | 6 Months Ended |
Apr. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Earnings (Loss) Per Share | Net Earnings (Loss) 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. The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows: Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions, except per share amounts Numerator: (Loss) earnings from continuing operations $ (487 ) $ 322 $ (232 ) $ 684 (Loss) earnings from discontinued operations (125 ) (2 ) (113 ) (97 ) Net (loss) earnings $ (612 ) $ 320 $ (345 ) $ 587 Denominator: Weighted-average shares used to compute basic net EPS 1,658 1,725 1,664 1,743 Dilutive effect of employee stock plans (1) — 26 — 22 Weighted-average shares used to compute diluted net EPS (1) 1,658 1,751 1,664 1,765 Basic net (loss) earnings per share: Continuing operations $ (0.29 ) $ 0.19 $ (0.14 ) $ 0.39 Discontinued operations (0.08 ) — (0.07 ) (0.06 ) Basic net (loss) earnings per share $ (0.37 ) $ 0.19 $ (0.21 ) $ 0.33 Diluted net (loss) earnings per share: (1) Continuing operations $ (0.29 ) $ 0.18 $ (0.14 ) $ 0.39 Discontinued operations (2) (0.08 ) — (0.07 ) (0.06 ) Diluted net (loss) earnings per share $ (0.37 ) $ 0.18 $ (0.21 ) $ 0.33 Anti-dilutive weighted-average stock awards (1) 85 46 90 51 (1) The Company excludes shares potentially issuable under employee stock plans that could dilute basic EPS in the future from the calculation of diluted net earnings (loss) per share, as their effect, if included, would have been anti-dilutive for the periods presented. (2) U.S. GAAP requires the denominator used in the diluted EPS calculation for discontinued operations to be the same as that of continuing operations, regardless of net earnings (loss) from continuing operations. |
Litigation and Contingencies
Litigation and Contingencies | 6 Months Ended |
Apr. 30, 2017 | |
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 Agreements between Hewlett Packard Enterprise and HP Inc. (formerly known as "Hewlett-Packard Company") and Hewlett Packard Enterprise and DXC (formerly known as "Everett SpinCo, Inc."), the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements 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 Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of Everett SpinCo Inc. from Hewlett Packard Enterprise), in each case arising prior to the applicable 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 the Company. 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 April 30, 2017 , 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 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 Staff of the SEC, which is set forth in an amended SEC administrative order dated July 15, 2016. Hewlett Packard Enterprise’s obligations to the SEC expired in April 2017. Hewlett Packard Enterprise’s obligations to the DOJ run for three years following a court proceeding held in connection with the resolution, and thus continue until September 2017. 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. Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise. This purported class and collective action was filed on August 18, 2016 and an amended complaint was filed on December 19, 2016 in the United States District Court for the Northern District of California, against HP Inc. and Hewlett Packard Enterprise alleging defendants violated the Federal Age Discrimination in Employment Act ("ADEA"), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers. Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of all individuals aged 40 and older who had their employment terminated by an HP entity pursuant to a work force reduction ("WFR") plan on or after December 9, 2014 for individuals terminated in deferral states and on or after April 8, 2015 in non-deferral states. Plaintiffs also seek to certify a Rule 23 class under California law comprised of all persons 40 years or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after August 18, 2012. Wall v. Hewlett-Packard Enterprise Company and HP Inc. This certified California class action and Private Attorney General Act action was filed against Hewlett-Packard Company on January 17, 2012 and the fifth amended (and operative) complaint was filed against HP Inc. and Hewlett Packard Enterprise on June 28, 2016. The complaint alleges that the defendants paid earned incentive compensation late and failed to timely pay final wages in violation of the California Labor Code. On August 9, 2016, the court ordered the class certified without prejudice to a future motion to amend or modify the class certification order or to decertify. Trial is set to begin on June 19, 2017. 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. $3 billion in damages: $1.7 billion for past lost profits and $1.3 billion for future lost profits. On December 19, 2016, the trial court denied Oracle's request for a new trial. On January 17, 2017 Oracle filed a notice of appeal. On February 2, 2017, HP Inc. filed a cross-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. Network-1 Technologies, Inc. v. Alcatel-Lucent USA Inc., et al. This patent infringement action was filed in September 2011 in the United States District Court for the Eastern District of Texas and alleges that various Hewlett Packard Enterprise switches and access points infringe Network-1’s patent relating to the 802.3af and 802.3at “Power over Ethernet” standards. The Network-1 patent at issue expires in 2020. On June 1, 2017, the Court held a hearing on HPE’s motion for summary judgment. No ruling has yet been issued. Trial is currently scheduled to begin on November 6, 2017. 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 | 6 Months Ended |
Apr. 30, 2017 | |
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. With the completion of the Everett Transaction, these service contracts now primarily relate to TS contracts. 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 support 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 claims and 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 April 30, 2017 and October 31, 2016 , the Company has recorded both a receivable from HP Inc. of $54 million and $56 million , respectively, and a payable to HP Inc. of $42 million and $41 million , respectively, related to litigation matters and other contingencies. In connection with the Everett Transaction, the Company entered into a Separation and Distribution Agreement with DXC effective April 1, 2017 where DXC agreed to indemnify HPE, 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 DXC as part of the Everett Transaction. HPE similarly agreed to indemnify DXC, each of its subsidiaries and each of their respective directors, officers and employees from and against all claims and liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to the Company as part of the Everett Transaction. As a result, as of April 30, 2017, the Company has recorded a net receivable from DXC of $108 million related to litigation matters and other contingencies. Shared Litigation with HP Inc. and DXC As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., and Hewlett Packard Enterprise and DXC, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise), in each case arising prior to the applicable separation. Tax Matters Agreement with HPI 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 Condensed Consolidated Balance Sheet. In addition, if the Distribution of Hewlett Packard Enterprise's common shares to the HP Inc. stockholders 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 April 30, 2017 , 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. Tax Matters Agreement with DXC and Other Income Tax Matters In connection with the Everett Transaction, the Company entered into a Tax Matters Agreement (the "DXC Tax Matters Agreement") with DXC effective on April 1, 2017 that governs the rights and obligations of the Company and DXC for certain pre-divestiture tax liabilities. The DXC Tax Matters Agreement generally provides that the Company will be responsible for pre-divestiture income tax liabilities that arise from adjustments made by tax authorities to the Company and DXC's U.S. and certain non-U.S. income tax returns. In certain jurisdictions the Company and DXC 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 addition, if the distribution of Everett's common shares to Hewlett Packard Enterprise's stockholders is determined to be taxable, the Company would generally bear the tax liability, unless the taxability of the distribution is the direct result of actions taken by DXC in which case DXC would be responsible for any taxes imposed on the distribution. Upon completion of the Everett Transaction on April 1, 2017, the Company recorded a net income tax indemnification receivable from DXC for certain income tax liabilities. The actual amount that DXC may be obligated to pay the Company could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several years. The net receivable as of April 30, 2017 was $127 million . 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 as of April 30, 2017 , and changes during the six months ended April 30, 2017 were as follows: Six months ended In millions Balance at beginning of period $ 497 Accruals for warranties issued 167 Adjustments related to pre-existing warranties (including changes in estimates) (6 ) Settlements made (in cash or in kind) (159 ) Balance at end of period $ 499 |
Equity Method Investments
Equity Method Investments | 6 Months Ended |
Apr. 30, 2017 | |
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 Condensed Consolidated Balance Sheets. As of April 30, 2017 and October 31, 2016 , the Company's Investments in equity interests primarily included $2.6 billion related to a 49% interest in H3C. Investment in H3C In May 2016, Tsinghua Holdings’ subsidiary, Unisplendour Corporation, purchased 51% of the new business named H3C, comprising Hewlett Packard Enterprise’s former H3C Technologies and China-based servers, storage and technology services business which were previously reported within the Enterprise Group segment. The Company retained a 49% interest in the new company, which it records as an equity method investment. During the three and six months ended April 30, 2017 , the Company recorded a Loss from equity interests of $3 million and $25 million , respectively, in the Condensed Consolidated Statements of Earnings. For the three months ended April 30, 2017, the loss comprised of $38 million in basis difference amortization expense, offset by $35 million which represented the Company's share of H3C net income. For the six months ended April 30, 2017, the loss comprised of $73 million in basis difference amortization expense, offset by $48 million which represented the Company's share of H3C net income. The loss from equity interests was reflected as a reduction in the carrying amount of Investments in equity interests in the Condensed Consolidated Balance Sheet as of April 30, 2017 . The Company also has commercial arrangements with H3C to buy and sell HPE branded servers, storage, networking and technology services. During the three and six months ended April 30, 2017 , HPE recorded approximately $253 million and $513 million in sales to H3C and $66 million and $157 million in purchases from H3C. Net payables due to H3C as of April 30, 2017 and October 31, 2016 were approximately $57 million and $71 million , respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Apr. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events During May 2017, the Company completed a sale and leaseback transaction of its properties located in Roseville, California, for total consideration of $104 million . |
Overview and Basis of Present28
Overview and Basis of Presentation (Policies) | 6 Months Ended |
Apr. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These Condensed Consolidated Financial Statements of the Company were prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of April 30, 2017 and October 31, 2016 , its results of operations for the three and six months ended April 30, 2017 and 2016 and its cash flows for the six months ended April 30, 2017 and 2016 . The results of operations and cash flows for the six months ended April 30, 2017 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2016 , including "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated and Combined Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, included therein. The historical results of operations and financial position of Everett are included in the Condensed Consolidated Financial Statements and reported as discontinued operations in all periods presented within this Quarterly Report on Form 10-Q, with the exception of the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows. The historical information in the accompanying Notes to the Condensed Consolidated Financial Statements has been restated to reflect the effect of the Everett Transaction, with the exception of stockholders' equity. For further information on discontinued operations, see Note 2, "Discontinued Operations". |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited Condensed Consolidated 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 businesses of the Company have been eliminated. 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 Earnings (loss) from equity interests in the Condensed Consolidated Statements of Earnings. Non-controlling interests are presented as a separate component within Total stockholders' equity in the Condensed Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Condensed Consolidated Statements of Earnings and are not presented separately, as they were not material for any period presented. |
Segment Realignment and Reclassifications | Segment Realignment and Reclassifications Effective at the beginning of the first quarter of fiscal 2017, the Company 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 and other 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 3, "Segment Information", for a further discussion of the Company's segment realignment. Prior to the completion of the Everett Transaction and effective at the beginning of the second quarter of fiscal 2017, the Company realigned certain product groups that were historically managed by the former Enterprise Services segment ("former ES segment") and included in the former ES segment's results of operations. This realignment is reflected in HPE's Condensed Consolidated Financial Statements as a transfer of the MphasiS product group to the Corporate Investments segment. For additional information related to the realignment, see Note 3, "Segment Information". |
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 Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. |
Recently Enacted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“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 adopted the amendments in the first quarter of fiscal 2017 and applied them retrospectively to all periods presented, as permitted by the standard. The adoption of these amendments did not have a material impact on the Company's Condensed Consolidated 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 adopted the amendments in the first quarter of fiscal 2017 and applied them retrospectively to all periods presented. For fiscal 2016, the adoption resulted in the reclassification of $50 million of debt issuance costs from Long-term financing receivables and other assets to Notes payable and short-term borrowings and Long-term debt on the Condensed Consolidated Balance Sheets. The adoption of these amendments did not have a material impact on the Company's Condensed Consolidated Financial Statements. Recently Enacted Accounting Pronouncements In March 2017, the FASB amended the existing accounting standard for retirement benefits. The amendments require the presentation of the service cost component of net periodic benefit cost in the same income statement line items as other employee compensation costs, unless eligible for capitalization. The other components of net periodic benefit costs will be presented separately from service cost as non-operating costs. 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 Condensed Consolidated Financial Statements. In October 2016, the FASB amended the existing accounting standards for income taxes. The amendments require the recognition of the income tax consequences for intra-entity transfers of assets other than inventory when the transfer occurs. 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 Condensed Consolidated 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 Condensed Consolidated Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and lease 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 Condensed Consolidated 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 and the impact of these amendments on its Condensed Consolidated 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 Condensed Consolidated 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 plans to adopt the new revenue standard in the first quarter of fiscal 2019, beginning November 1, 2018, using the modified retrospective method, and is currently assessing the impact on its Condensed Consolidated 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 to our customers. 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 7, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $439 million during fiscal 2017 and $3.7 billion during fiscal 2016. 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 are eliminated from both Hewlett Packard Enterprise consolidated and segment net revenues. Financing interest in the Condensed Consolidated Statements of Earnings reflects interest expense on borrowing- and funding-related activities associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise, a portion of the proceeds of which benefited FS. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include separation costs, restructuring charges, stock-based compensation expense, amortization of intangible assets, certain corporate governance costs, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement benefit. |
Retirement and Post-Retirement Plans | The Company's pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post-retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active and closed plans or the life expectancy of plan participants for frozen plans. During the first quarter of fiscal 2017, the Company changed its method used to estimate the service and interest cost components of net periodic benefit cost for defined benefit plans to a full yield curve approach with costs calculated at individual annual spot rates. |
Stock-Based Compensation | (1) The weighted-average fair value was based on the fair value of stock options granted during the period. There were no stock options granted during the three months ended April 30, 2017. (2) The expected volatility was estimated using the average historical volatility of selected peer companies. (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 award. (5) For awards subject to service-based vesting, the expected term was estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 110, for performance-contingent awards the expected term represents an output from the lattice model. The Company utilizes the Black-Scholes-Merton option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The Company estimates 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. |
Taxes on Earnings | recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in Provision for taxes in the Condensed Consolidated Statements of Earnings. 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. |
Credit Quality Indicators | Credit Quality Indicators Due to the homogeneous 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. |
Allowance for Doubtful Accounts | 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. |
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. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The following table presents the financial results for HPE's discontinued operations up to the completion of the separation on April 1, 2017. For the period following the completion of the Everett Transaction, discontinued operations primarily includes separation costs related to third-party consulting, contractor fees and other incremental costs arising from the transaction: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Net Revenue $ 2,487 $ 4,202 $ 6,338 $ 8,394 Cost of revenue (1) 2,073 3,601 5,357 7,312 Expenses (2) 643 560 1,203 1,129 Interest and other, net 4 8 4 14 (Loss) earnings from discontinued operations before taxes (233 ) 33 (226 ) (61 ) Benefit (provision) for taxes 108 (35 ) 113 (36 ) Net loss from discontinued operations $ (125 ) $ (2 ) $ (113 ) $ (97 ) (1) Cost of revenue includes cost of products and cost of services. (2) Expenses for the three and six months ended April 30, 2017 and 2016 include expenses primarily consisting of selling, general and administrative (“SG&A”) expenses, research and development (“R&D”) expenses, restructuring charges, separation costs related to the Everett Transaction, amortization of intangible assets, acquisition and other related charges, and defined benefit plan settlement charges and remeasurement (benefit). For the three and six months ended April 30, 2017 and 2016 , significant non-cash items and capital expenditures of discontinued operations are outlined below: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Depreciation and amortization $ 129 $ 358 $ 388 $ 734 Purchases of property, plant and equipment $ 53 $ 224 $ 131 $ 486 The following table presents assets and liabilities that are presented as discontinued operations in the Consolidated Balance Sheet as of October 31, 2016 and that were transferred to Everett as of April 1, 2017: As of October 31, 2016 Accounts receivable $ 3,093 Inventory 34 Other current assets 1,116 Total current assets of discontinued operations $ 4,243 Property, plant and equipment $ 3,332 Long-term financing receivables and other non-current assets 1,591 Total non-current assets of discontinued operations $ 4,923 Notes payable and short-term borrowings $ 3 Accounts payable 933 Employee compensation and benefits 838 Taxes on earnings 55 Deferred revenue 849 Other accrued liabilities 1,504 Total current liabilities of discontinued operations $ 4,182 Long-term debt $ 392 Other non-current liabilities 3,621 Total non-current liabilities of discontinued operations $ 4,013 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Revenue and Earnings from Operations, by Segment | Segment Operating Results from Continuing Operations Enterprise Group Software Financial Services Corporate Investments Total In millions Three months ended April 30, 2017 Net revenue $ 5,943 $ 637 $ 865 $ — $ 7,445 Intersegment net revenue and other (1) 300 48 7 — 355 Total segment net revenue $ 6,243 $ 685 $ 872 $ — $ 7,800 Segment earnings (loss) from operations $ 548 $ 181 $ 78 $ (38 ) $ 769 Three months ended April 30, 2016 Net revenue $ 6,870 $ 703 $ 764 $ 172 $ 8,509 Intersegment net revenue and other (1) 289 71 24 — 384 Total segment net revenue $ 7,159 $ 774 $ 788 $ 172 $ 8,893 Segment earnings (loss) from operations $ 847 $ 192 $ 73 $ (59 ) $ 1,053 Six months ended April 30, 2017 Net revenue $ 12,041 $ 1,291 $ 1,669 $ — $ 15,001 Intersegment net revenue and other (1) 527 115 26 — 668 Total segment net revenue $ 12,568 $ 1,406 $ 1,695 $ — $ 15,669 Segment earnings (loss) from operations $ 1,350 $ 335 $ 156 $ (81 ) $ 1,760 Six months ended April 30, 2016 Net revenue $ 13,752 $ 1,423 $ 1,518 $ 348 $ 17,041 Intersegment net revenue and other (1) 589 131 46 — 766 Total segment net revenue $ 14,341 $ 1,554 $ 1,564 $ 348 $ 17,807 Segment earnings (loss) from operations $ 1,811 $ 328 $ 173 $ (135 ) $ 2,177 (1) Other includes adjustments for sales to the former ES segment which, prior to the completion of the Everett Transaction, were reflected as intersegment net revenue. For the three and six months ended April 30, 2017 and April 30, 2016, the amounts include the elimination of intercompany sales to the former ES segment, which is included within Net loss from discontinued operations in the Condensed Consolidated Statements of Earnings. |
Schedule of reconciliation of revenues and earnings before taxes from segments to consolidated and combined | The reconciliation of segment operating results to Hewlett Packard Enterprise condensed consolidated results was as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Net Revenue: Total segments $ 7,800 $ 8,893 $ 15,669 $ 17,807 Elimination of intersegment net revenue and other (355 ) (384 ) (668 ) (766 ) Total Hewlett Packard Enterprise condensed consolidated net revenue $ 7,445 $ 8,509 $ 15,001 $ 17,041 Earnings before taxes: Total segment earnings from operations $ 769 $ 1,053 $ 1,760 $ 2,177 Corporate and unallocated costs and eliminations (90 ) (177 ) (161 ) (301 ) Stock-based compensation expense (96 ) (103 ) (219 ) (230 ) Amortization of intangible assets (107 ) (101 ) (208 ) (220 ) Restructuring charges (118 ) (87 ) (234 ) (253 ) Acquisition and other related charges (51 ) (43 ) (95 ) (80 ) Separation costs (141 ) (91 ) (226 ) (170 ) Defined benefit plan settlement charges and remeasurement benefit 16 — 21 — Interest and other, net (85 ) (52 ) (163 ) (126 ) Tax indemnification adjustments 7 (69 ) (11 ) (54 ) Loss from equity interests (3 ) — (25 ) — Total Hewlett Packard Enterprise condensed consolidated earnings from continuing operations before taxes $ 101 $ 330 $ 439 $ 743 |
Schedule of net revenue by segment and business unit | Net revenue by segment and business unit was as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Servers $ 2,991 $ 3,498 $ 6,094 $ 7,034 Technology Services 1,971 2,019 3,914 4,004 Storage 699 808 1,429 1,645 Networking 582 834 1,131 1,658 Enterprise Group 6,243 7,159 12,568 14,341 Software 685 774 1,406 1,554 Financial Services 872 788 1,695 1,564 Corporate Investments — 172 — 348 Total segment net revenue 7,800 8,893 15,669 17,807 Elimination of intersegment net revenue and other (355 ) (384 ) (668 ) (766 ) Total Hewlett Packard Enterprise condensed consolidated net revenue $ 7,445 $ 8,509 $ 15,001 $ 17,041 |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Plans | Restructuring activities related to the Company's employees and infrastructure, summarized by plan, are presented in the table below: Fiscal 2015 Plan Fiscal 2012 Plan Employee Severance Infrastructure and other Employee Severance and EER Infrastructure and other Total In millions Liability as of October 31, 2016 $ 277 $ 22 $ 39 $ 15 $ 353 Charges 198 28 8 — 234 Cash payments (221 ) (14 ) (18 ) (4 ) (257 ) Non-cash items (23 ) (19 ) 2 (8 ) (48 ) Liability as of April 30, 2017 $ 231 $ 17 $ 31 $ 3 $ 282 Total costs incurred to date, as of April 30, 2017 $ 642 $ 86 $ 1,237 $ 222 $ 2,187 Total costs expected to be incurred, as of April 30, 2017 $ 850 $ 265 $ 1,237 $ 222 $ 2,574 |
Retirement and Post-Retiremen32
Retirement and Post-Retirement Benefit Plans (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of net pension and post-retirement benefit cost | Three months ended April 30, Non-U.S. Defined Post-Retirement 2017 2016 2017 2016 In millions Service cost $ 30 $ 50 $ 1 $ 1 Interest cost 52 78 1 2 Expected return on plan assets (131 ) (161 ) — — Amortization and deferrals: Actuarial loss (gain) 64 54 (1 ) (1 ) Prior service benefit (4 ) (4 ) — — Net periodic benefit cost 11 17 1 2 Settlement loss 3 1 — — Special termination benefits 1 1 — — Plan expense allocation (5 ) (2 ) — — Net benefit cost from continuing operations 10 17 1 2 Summary of net benefit cost: Continuing operations 10 17 1 2 Discontinued operations 35 22 — — Net benefit cost $ 45 $ 39 $ 1 $ 2 Six months ended April 30, Non-U.S. Defined Post-Retirement 2017 2016 2017 2016 In millions Service cost $ 70 $ 100 $ 2 $ 2 Interest cost 102 158 2 4 Expected return on plan assets (264 ) (331 ) — (1 ) Amortization and deferrals: Actuarial loss (gain) 140 109 (2 ) (2 ) Prior service benefit (8 ) (9 ) — — Net periodic benefit cost 40 27 2 3 Settlement loss 3 1 — — Special termination benefits 2 3 — — Plan expense allocation (15 ) (4 ) (1 ) — Net benefit cost from continuing operations 30 27 1 3 Summary of net benefit cost: Continuing operations 30 27 1 3 Discontinued operations 79 40 1 — Net benefit cost $ 109 $ 67 $ 2 $ 3 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Share-based compensation | |
Schedule of stock based compensation expense and the resulting tax benefits | Stock-based compensation expense and the resulting tax benefits were as follows: Three Months Ended Six Months Ended 2017 2016 2017 2016 In millions Stock-based compensation expense from continuing operations $ 126 $ 103 $ 278 $ 230 Income tax benefit (41 ) (30 ) (89 ) (67 ) Stock-based compensation expense from continuing operations, net of tax $ 85 $ 73 $ 189 $ 163 Stock-based compensation expense from discontinued operations $ 78 $ 35 $ 100 $ 73 |
Schedule of restricted stock award activity | A summary of restricted stock unit activity is as follows: Six Months Ended Shares Weighted-Average Grant Date Fair Value Per Share In thousands Outstanding at beginning of period 57,321 $ 15 Granted and assumed through acquisition (1) 21,405 $ 21 Additional shares granted due to conversion (2) 12,902 $ 18 Vested (3) (36,473 ) $ 16 Forfeited/canceled (4) (2,079 ) $ 17 Outstanding at end of period 53,076 $ 18 (1) Includes approximately 11 million restricted stock units assumed by the Company through acquisition with a weighted-average grant date fair value of $18 per share. (2) Additional shares granted as a result of the post-spin exercise price adjustments made related to the Everett Transaction, in order to preserve the intrinsic value of the awards prior to the close of the transaction. (3) Includes approximately 9 million restricted stock units, with a weighted-average grant date fair value of $18 per share, which were accelerated as part of the Everett Transaction. (4) Includes approximately 0.3 million restricted stock units, with a weighted-average grant date fair value of $18 per share, related to the former ES segment, which were canceled by HPE and assumed by DXC in connection with the Everett Transaction and in accordance with the Employee Matters Agreement. |
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: Six Months Ended Weighted-average fair value (1) $ 6 Expected volatility (2) 25.7 % Risk-free interest rate (3) 2.0 % Expected dividend yield (4) 1.0 % Expected term in years (5) 6.1 (1) The weighted-average fair value was based on the fair value of stock options granted during the period. There were no stock options granted during the three months ended April 30, 2017. (2) The expected volatility was estimated using the average historical volatility of selected peer companies. (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 award. (5) For awards subject to service-based vesting, the expected term was estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 110, for performance-contingent awards the expected term represents an output from the lattice model. |
Schedule of stock option activity | A summary of stock option activity is as follows: Six months ended April 30, 2017 Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value In thousands In years In millions Outstanding at beginning of period 57,498 $ 15 Granted and assumed through acquisition 5,242 $ 24 Additional shares granted due to conversion (1) 12,574 $ 12 Exercised (16,281 ) $ 14 Forfeited/canceled/expired (2) (8,389 ) $ 16 Outstanding at end of period (3) 50,644 $ 12 5.0 $ 329 Vested and expected to vest at end of period (3) 49,682 $ 12 5.0 $ 324 Exercisable at end of period (3) 28,811 $ 11 3.7 $ 224 (1) Additional shares granted as a result of the post-spin exercise price adjustments made related to the Everett Transaction, in order to preserve the intrinsic value of the awards prior to the close of the transaction. (2) Includes approximately 8 million stock options, with a weighted-average exercise price of $16 per share, related to the former ES segment, which were canceled by HPE and assumed by DXC in connection with the Everett Transaction and in accordance with the Employee Matters Agreement. (3) The weighted average exercise price reflects the impact of the post-spin adjustment to the exercise price related to the Everett Transaction. |
Taxes on Earnings (Tables)
Taxes on Earnings (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of current and long-term deferred tax assets and liabilities | Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 October 31, 2016 In millions Deferred tax assets - long-term $ 3,491 $ 3,830 Deferred tax liabilities - long-term (83 ) (98 ) Deferred tax assets net of deferred tax liabilities $ 3,408 $ 3,732 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Accounts Receivable | Accounts Receivable, Net As of April 30, 2017 October 31, 2016 In millions Accounts receivable, billed $ 3,585 $ 3,681 Unbilled receivable 267 191 Accounts receivable, gross 3,852 3,872 Allowance for doubtful accounts (42 ) (56 ) Total $ 3,810 $ 3,816 |
Schedule of allowance for doubtful accounts related to accounts receivable | The allowance for doubtful accounts related to accounts receivable and changes to the allowance were as follows: Six Months Ended In millions Balance at beginning of year $ 56 Deductions, net of recoveries (14 ) Balance at end of period $ 42 |
Schedule of revolving short-term financing arrangements | The activity related to Hewlett Packard Enterprise's revolving short-term financing arrangements was as follows: Six Months Ended In millions Balance at beginning of year (1) $ 145 Trade receivables sold 1,541 Cash receipts (1,624 ) Foreign currency and other (1 ) Balance at end of period (1) $ 61 (1) Beginning and ending balances represent amounts for trade receivables sold, but not yet collected. |
Schedule of Inventory | Inventory As of April 30, 2017 October 31, 2016 In millions Finished goods $ 1,218 $ 1,182 Purchased parts and fabricated assemblies 823 558 Total $ 2,041 $ 1,740 |
Schedule of Other Current Assets | Other Current Assets As of April 30, 2017 October 31, 2016 In millions Value-added taxes receivable $ 673 $ 762 Manufacturer and other receivables 1,055 1,010 Prepaid and other current assets 1,364 999 Total $ 3,092 $ 2,771 |
Schedule of Property, Plant and Equipment | Property, Plant and Equipment As of April 30, 2017 October 31, 2016 In millions Land $ 313 $ 353 Buildings and leasehold improvements 2,689 3,547 Machinery and equipment, including equipment held for lease 9,736 9,024 12,738 12,924 Accumulated depreciation (6,046 ) (6,620 ) Total $ 6,692 $ 6,304 |
Schedule of Other Assets, Noncurrent | Long-Term Financing Receivables and Other Assets As of April 30, 2017 October 31, 2016 In millions Financing receivables, net $ 3,953 $ 4,584 Deferred tax assets 3,491 3,830 Prepaid pension assets 577 365 Other 2,826 2,796 Total $ 10,847 $ 11,575 |
Other Current Liabilities | Other Accrued Liabilities As of April 30, 2017 October 31, 2016 In millions Accrued taxes - other $ 830 $ 866 Warranty - short-term 274 258 Sales and marketing programs 764 853 Other 2,505 1,880 Total $ 4,373 $ 3,857 |
Other Liabilities | Other Liabilities As of April 30, 2017 October 31, 2016 In millions Pension, post-retirement and post-employment liabilities $ 1,779 $ 2,101 Deferred revenue - long-term 2,624 2,485 Tax liability - long-term 3,518 3,950 Other long-term liabilities 1,020 865 Total $ 8,941 $ 9,401 |
Financing Receivables and Ope36
Financing Receivables and Operating Leases (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Leases [Abstract] | |
Components of financing receivables | The components of financing receivables were as follows: As of April 30, 2017 October 31, 2016 In millions Minimum lease payments receivable $ 7,615 $ 8,480 Unguaranteed residual value 242 231 Unearned income (595 ) (678 ) Financing receivables, gross 7,262 8,033 Allowance for doubtful accounts (80 ) (89 ) Financing receivables, net 7,182 7,944 Less: current portion (1) (3,229 ) (3,360 ) Amounts due after one year, net (1) $ 3,953 $ 4,584 (1) The Company includes the current portion in Financing receivables, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets. |
Credit risk profile of gross financing receivables | The credit risk profile of gross financing receivables, based upon internal risk ratings, was as follows: As of April 30, 2017 October 31, 2016 In millions Risk Rating: Low $ 3,826 $ 4,027 Moderate 3,337 3,909 High 99 97 Total $ 7,262 $ 8,033 |
Schedule of allowance for doubtful accounts for financing receivables | The allowance for doubtful accounts for financing receivables as of April 30, 2017 and October 31, 2016 and the respective changes during the six and twelve months then ended were as follows: As of April 30, 2017 October 31, 2016 In millions Balance at beginning of period $ 89 $ 95 Provision for doubtful accounts 8 11 Write-offs (17 ) (17 ) Balance at end of period $ 80 $ 89 |
Gross financing receivables and related allowance evaluated for loss | The gross financing receivables and related allowance evaluated for loss were as follows: As of April 30, 2017 October 31, 2016 In millions Gross financing receivables collectively evaluated for loss $ 6,974 $ 7,750 Gross financing receivables individually evaluated for loss 288 283 Total $ 7,262 $ 8,033 Allowance for financing receivables collectively evaluated for loss $ 62 $ 73 Allowance for financing receivables individually evaluated for loss 18 16 Total $ 80 $ 89 |
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 April 30, 2017 October 31, 2016 In millions Billed: (1) Current 1-30 days $ 311 $ 389 Past due 31-60 days 34 54 Past due 61-90 days 36 14 Past due > 90 days 55 68 Unbilled sales-type and direct-financing lease receivables 6,826 7,508 Total gross financing receivables $ 7,262 $ 8,033 Gross financing receivables on non-accrual status (2) $ 181 $ 163 Gross financing receivables 90 days past due and still accruing interest (2) $ 107 $ 120 (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 Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 October 31, 2016 In millions Equipment leased to customers $ 7,593 $ 5,467 Accumulated depreciation (2,900 ) (2,134 ) Total $ 4,693 $ 3,333 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table presents the aggregate purchase price allocation, including those items that are still preliminary allocations, for the Company's acquisitions for the six months ended April 30, 2017: In millions Goodwill $ 1,323 Amortizable intangible assets 579 In-process research and development 85 Net assets assumed 319 Total fair value consideration $ 2,306 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of allocation and changes in the carrying amount of goodwill | Goodwill allocated to the Company's reportable segments as of April 30, 2017 and changes in the respective carrying amounts during the six months then ended were as follows: Enterprise Group Software Financial Services Total In millions Balance at October 31, 2016 $ 15,945 $ 8,089 $ 144 $ 24,178 Goodwill acquired during the period 1,323 — — 1,323 Changes due to foreign currency (1 ) — — (1 ) Goodwill adjustments (2 ) — — (2 ) Balance at April 30, 2017 $ 17,265 $ 8,089 $ 144 $ 25,498 |
Schedule of Intangible Assets and Goodwill | The Company's intangible assets are composed of: As of April 30, 2017 As of October 31, 2016 Gross Accumulated Amortization Accumulated Impairment Loss Net Gross Accumulated Amortization Accumulated Impairment Loss Net In millions Customer contracts, customer lists and distribution agreements $ 1,488 $ (305 ) $ (856 ) $ 327 $ 1,394 $ (322 ) $ (856 ) $ 216 Developed and core technology and patents 4,565 (1,378 ) (2,138 ) 1,049 4,190 (1,232 ) (2,138 ) 820 Trade name and trademarks 215 (27 ) (109 ) 79 178 (21 ) (109 ) 48 In-process research and development 85 — — 85 — — — — Total intangible assets $ 6,353 $ (1,710 ) $ (3,103 ) $ 1,540 $ 5,762 $ (1,575 ) $ (3,103 ) $ 1,084 |
Schedule of estimated future amortization expense related to finite-lived purchased intangible assets | As of April 30, 2017 , estimated future amortization expense related to finite-lived intangible assets was as follows: Fiscal year: In millions 2017 (remaining 6 months) $ 243 2018 383 2019 306 2020 248 2021 106 2022 78 Thereafter 91 Total $ 1,455 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 As of October 31, 2016 Fair Value Measured Using Fair Value Measured Using Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total In millions Assets Cash Equivalents and Investments: Time deposits $ — $ 2,446 $ — $ 2,446 $ — $ 4,035 $ — $ 4,035 Money market funds 2,845 — — 2,845 6,495 — — 6,495 Equity securities in public companies 21 — — 21 16 — — 16 Foreign bonds 8 214 — 222 — 180 — 180 Other debt securities — — 27 27 — — 28 28 Derivative Instruments: Interest rate contracts — — — — — 109 — 109 Foreign exchange contracts — 433 — 433 — 611 — 611 Other derivatives — 2 — 2 — — — — Total assets $ 2,874 $ 3,095 $ 27 $ 5,996 $ 6,511 $ 4,935 $ 28 $ 11,474 Liabilities Derivative Instruments: Interest rate contracts $ — $ 122 $ — $ 122 $ — $ 6 $ — $ 6 Foreign exchange contracts — 265 — 265 — 211 — 211 Other derivatives — — — — — 2 — 2 Total liabilities $ — $ 387 $ — $ 387 $ — $ 219 $ — $ 219 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 As of October 31, 2016 Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value In millions Cash Equivalents: Time deposits $ 2,435 $ — $ — $ 2,435 $ 4,024 $ — $ — $ 4,024 Money market funds 2,845 — — 2,845 6,495 — — 6,495 Total cash equivalents 5,280 — — 5,280 10,519 — — 10,519 Available-for-Sale Investments: Debt securities: Time deposits 11 — — 11 11 — — 11 Foreign bonds 184 38 — 222 131 49 — 180 Other debt securities 39 — (12 ) 27 40 — (12 ) 28 Total debt securities 234 38 (12 ) 260 182 49 (12 ) 219 Equity securities: Equity securities in public companies 20 1 — 21 20 — (4 ) 16 Total equity securities 20 1 — 21 20 — (4 ) 16 Total available-for-sale investments 254 39 (12 ) 281 202 49 (16 ) 235 Total cash equivalents and available-for-sale investments $ 5,534 $ 39 $ (12 ) $ 5,561 $ 10,721 $ 49 $ (16 ) $ 10,754 |
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: April 30, 2017 Amortized Cost Fair Value In millions Due in more than five years $ 234 $ 260 |
Schedule of gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets | The gross notional and fair value of derivative instruments in the Condensed Consolidated Balance Sheets were as follows: As of April 30, 2017 As of October 31, 2016 Fair Value Fair Value Outstanding Gross Notional Other Current Assets Long-Term Financing Receivables and Other Assets Other Accrued Liabilities Long-Term Other Liabilities Outstanding Gross Notional Other Current Assets Long-Term Financing Receivables and Other Assets Other Accrued Liabilities Long-Term Other Liabilities In millions Derivatives designated as hedging instruments Fair value hedges: Interest rate contracts $ 9,500 $ — $ — $ — $ 122 $ 9,500 $ — $ 109 $ — $ 6 Cash flow hedges: Foreign currency contracts 7,483 159 91 79 25 6,450 247 172 31 15 Net investment hedges: Foreign currency contracts 1,932 40 21 34 37 1,891 53 28 23 28 Total derivatives designated as hedging instruments 18,915 199 112 113 184 17,841 300 309 54 49 Derivatives not designated as hedging instruments Foreign currency contracts 9,472 120 2 86 4 16,496 100 11 103 11 Other derivatives 102 2 — — — 135 — — 2 — Total derivatives not designated as hedging instruments 9,574 122 2 86 4 16,631 100 11 105 11 Total derivatives $ 28,489 $ 321 $ 114 $ 199 $ 188 $ 34,472 $ 400 $ 320 $ 159 $ 60 |
Schedule of information related to the potential effect of the company's use of the master netting agreements and collateral security agreements | As of April 30, 2017 and October 31, 2016 , 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 April 30, 2017 In the Condensed Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Not Offset Gross Amount Recognized Gross Amount Offset Net Amount Presented Derivatives Financial Collateral Net Amount In millions Derivative assets $ 435 $ — $ 435 $ 247 $ 141 (1) $ 47 Derivative liabilities $ 387 $ — $ 387 $ 247 $ 177 (2) $ (37 ) As of October 31, 2016 In the Condensed Consolidated Balance Sheets (i) (ii) (iii) = (i)–(ii) (iv) (v) (vi) = (iii)–(iv)–(v) Gross Amounts Not Offset Gross Amount Recognized Gross Amount Offset Net Amount Presented Derivatives Financial Collateral Net Amount In millions Derivative assets $ 720 $ — $ 720 $ 207 $ 465 (1) $ 48 Derivative liabilities $ 219 $ — $ 219 $ 207 $ 10 (3) $ 2 (1) Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2) Represents the collateral posted by the Company in cash 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. The amount includes $226 million of cash collateral posted, net of $49 million of cash collateral returned. (3) 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 six months ended April 30, 2017 and 2016 were as follows: Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended April 30, 2017 Six months ended April 30, 2017 Hedged Item Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions In millions Interest rate contracts Interest and other, net $ 37 $ (225 ) Fixed-rate debt Interest and other, net $ (37 ) $ 225 Gains (Losses) Recognized in Earnings on Derivative and Related Hedged Item Derivative Instrument Location Three months ended April 30, 2016 Six months ended April 30, 2016 Hedged Item Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions In millions Interest rate contracts Interest and other, net $ 34 $ 167 Fixed-rate debt Interest and other, net $ (34 ) $ (167 ) |
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 three and six months ended April 30, 2016 was as follows: Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended April 30, 2016 Six months ended April 30, 2016 Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions In millions Cash flow hedges: Foreign currency contracts $ (192 ) $ (153 ) Net revenue $ (13 ) $ 28 Foreign currency contracts 3 2 Other operating expenses — — Foreign currency contracts 61 119 Interest and other, net 66 125 Subtotal (128 ) (32 ) Net earnings (loss) from continuing operations 53 153 Foreign currency contracts (78 ) (32 ) Net loss from discontinued operations 17 38 Total cash flow hedges $ (206 ) $ (64 ) Total $ 70 $ 191 Net investment hedges: Foreign currency contracts $ (137 ) $ (80 ) Interest and other, net $ — $ — Subtotal (137 ) (80 ) Net earnings (loss) from continuing operations — — Foreign currency contracts — — Net loss from discontinued operations — — Total $ (137 ) $ (80 ) Total $ — $ — The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships for the three and six months ended April 30, 2017 were as follows: Gains (Losses) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) Gains (Losses) Reclassified from Accumulated OCI Into Earnings (Effective Portion) Three months ended April 30, 2017 Six months ended April 30, 2017 Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions In millions Cash flow hedges: Foreign currency contracts $ (56 ) $ (1 ) Net revenue $ 2 $ 58 Foreign currency contracts (1 ) (1 ) Cost of products — — Foreign currency contracts 1 1 Other operating expenses — — Foreign currency contracts 66 142 Interest and other, net 66 149 Subtotal 10 141 Net earnings (loss) from continuing operations 68 207 Foreign currency contracts (6 ) (1 ) Net loss from discontinued operations 15 39 Total cash flow hedges $ 4 $ 140 Total $ 83 $ 246 Net investment hedges: Foreign currency contracts $ (8 ) $ (10 ) Interest and other, net $ — $ — Subtotal (8 ) (10 ) Net earnings (loss) from continuing operations — — Foreign currency contracts — — Net loss from discontinued operations — — Total $ (8 ) $ (10 ) Total $ — $ — |
Schedule of pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated and Combined Statements of Earnings | The pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Earnings for the three and six months ended April 30, 2017 and 2016 was as follows: Gains (Losses) Recognized in Earnings on Derivatives Location Three months ended April 30, 2017 Six months ended April 30, 2017 In millions Foreign currency contracts Interest and other, net $ (199 ) $ (246 ) Other derivatives Interest and other, net 1 4 Total $ (198 ) $ (242 ) Gains (Losses) Recognized in Earnings on Derivatives Location Three months ended April 30, 2016 Six months ended April 30, 2016 In millions Foreign currency contracts Interest and other, net $ (331 ) $ (323 ) Other derivatives Interest and other, net 5 — Total $ (326 ) $ (323 ) |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 October 31, 2016 Amount Outstanding Weighted-Average Interest Rate Amount Outstanding Weighted-Average Interest Rate Dollars in millions Current portion of long-term debt $ 1,217 2.6 % $ 2,772 1.7 % FS Commercial paper 343 — % 326 0.1 % Notes payable to banks, lines of credit and other (1) 450 2.2 % 429 2.0 % Total notes payable and short-term borrowings $ 2,010 $ 3,527 (1) Notes payable to banks, lines of credit and other includes $404 million and $381 million at April 30, 2017 and October 31, 2016 , respectively, of borrowing- and funding-related activity associated with FS and its subsidiaries. |
Schedule of Long-Term Debt | Long-Term Debt As of April 30, 2017 October 31, 2016 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 $ 750 $ 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 2,648 $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 1,348 $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 2,494 $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 750 750 $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 Other, including capital lease obligations, at 0.00%-6.05%, due in calendar years 2017-2021 (2) 202 300 Fair value adjustment related to hedged debt (122 ) 103 Unamortized debt issuance costs (3) (47 ) (50 ) Less: current portion (1,217 ) (2,772 ) Total long-term debt $ 11,904 $ 12,168 (1) The Company may redeem some or all of the fixed-rate Hewlett Packard Enterprise Senior Notes at any time in accordance with the terms thereof. (2) Other, including capital lease obligations includes $136 million and $181 million as of April 30, 2017 and October 31, 2016 , 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. (3) In April 2015, the FASB issued ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. During the first quarter of fiscal 2017, the Company adopted the standard retrospectively for the prior period presented. |
Schedule of interest expense on borrowings recognized in the Condensed Consolidated and Combined Statements of Earnings | Interest expense on borrowings recognized in the Condensed Consolidated Statements of Earnings was as follows: Three months ended April 30, Six months ended April 30, Expense Location 2017 2016 2017 2016 In millions Financing interest Financing interest $ 65 $ 61 $ 131 $ 119 Interest expense Interest and other, net 77 79 169 152 Total interest expense $ 142 $ 140 $ 300 $ 271 |
Schedule of borrowing resources available to obtain short-term or long-term additional liquidity | The Company had the following resources available to obtain short- or long-term additional liquidity if needed: As of April 30, 2017 In millions Commercial paper programs $ 4,157 Uncommitted lines of credit $ 1,802 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | The following table presents changes in Total stockholders' equity for the six months ended April 30, 2017. In millions Balance as of October 31, 2016 $ 31,518 Everett Transaction (1) (1,349 ) Net loss (2) (349 ) Other comprehensive income, net of taxes 476 Comprehensive income 127 127 Repurchase of common stock (1,350 ) Cash dividends declared (324 ) Stock-based compensation expense (3) 378 Other (4) 47 Balance as of April 30, 2017 $ 29,047 (1) Includes retained earnings of $3.9 billion and non-controlling interest of $30 million , reduced by accumulated other comprehensive loss of $2.6 billion . (2) Includes net loss of $345 million and net loss attributable to non-controlling interests of $4 million . (3) Includes unallocated stock-based compensation expense of $219 million , stock-based compensation expense included in Net loss from discontinued operations of $100 million , stock-based compensation expense included in Separation costs of $33 million , stock-based compensation expense related to workforce reductions included in Restructuring charges of $19 million , and stock-based compensation expense related to the acquisition of SGI recorded within Acquisition and other related charges of $7 million . (4) Other primarily includes shares acquired through business acquisitions, shares issued through the employee stock purchase program, exercise of options, and shares canceled, net of related tax benefits. |
Schedule of taxes related to changes in Other Comprehensive (Loss) Income | Taxes related to Other Comprehensive Income (Loss) Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions Taxes on change in net unrealized (losses) gains on available-for-sale securities: Tax provision on net unrealized (losses) gains arising during the period $ — $ (2 ) $ (1 ) $ (1 ) Tax provision (benefit) on (gains) losses reclassified into earnings — 1 — (2 ) — (1 ) (1 ) (3 ) Taxes on change in net unrealized losses on cash flow hedges: Tax benefit (provision) on net unrealized gains (losses) arising during the period 4 46 (27 ) 31 Tax provision on net gains reclassified into earnings 13 6 45 25 17 52 18 56 Taxes on change in unrealized components of defined benefit plans: Tax provision on gains (losses) arising during the period (1 ) — (25 ) — Tax benefit on amortization of actuarial loss and prior service benefit (5 ) (5 ) (11 ) (10 ) Tax provision on curtailments, settlements and other (7 ) (11 ) (14 ) (12 ) (13 ) (16 ) (50 ) (22 ) Tax benefit on change in cumulative translation adjustment — 42 1 22 Tax benefit (provision) on other comprehensive income $ 4 $ 77 $ (32 ) $ 53 |
Schedule of changes and reclassifications related to Other Comprehensive Loss, net of taxes | Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions Other comprehensive income (loss), net of taxes: Change in net unrealized (losses) gains on available-for-sale securities: Net unrealized (losses) gains arising during the period $ (4 ) $ — $ (18 ) $ 3 (Gains) losses reclassified into earnings — (4 ) — 2 (4 ) (4 ) (18 ) 5 Change in net unrealized losses on cash flow hedges: Net unrealized gains (losses) arising during the period 8 (160 ) 113 (33 ) Net gains reclassified into earnings (1) (70 ) (64 ) (201 ) (166 ) (62 ) (224 ) (88 ) (199 ) Change in unrealized components of defined benefit plans: Gains (losses) arising during the period 10 (1 ) 465 (1 ) Amortization of actuarial loss and prior service benefit (2) 72 65 163 132 Curtailments, settlements and other (4 ) (10 ) (11 ) (29 ) 78 54 617 102 Change in cumulative translation adjustment (11 ) 99 (35 ) (60 ) Other comprehensive income (loss), net of taxes $ 1 $ (75 ) $ 476 $ (152 ) (1) For more details on the reclassification of pre-tax net (gains) losses on cash flow hedges into the Condensed Consolidated Statements of Earnings, see Note 13, "Financial Instruments". (2) These components are included in the computation of net pension and post-retirement benefit (credit) cost in Note 5, "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 April 30, 2017 , and changes during the six months ended April 30, 2017 were as follows: Net unrealized gains (losses) on available-for-sale securities Net unrealized gains (losses) on cash flow hedges Unrealized components of defined benefit plans Cumulative translation adjustment Accumulated other comprehensive loss In millions Balance at beginning of period $ 54 $ 35 $ (5,642 ) $ (1,046 ) $ (6,599 ) Transfer related to the Everett Transaction (9 ) — 1,820 768 2,579 Other comprehensive (loss) income before reclassifications (18 ) 113 465 (35 ) 525 Reclassifications of (gains) loss into earnings — (201 ) 152 — (49 ) Balance at end of period $ 27 $ (53 ) $ (3,205 ) $ (313 ) $ (3,544 ) |
Net Earnings (Loss) Per Share (
Net Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
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: Three months ended April 30, Six months ended April 30, 2017 2016 2017 2016 In millions, except per share amounts Numerator: (Loss) earnings from continuing operations $ (487 ) $ 322 $ (232 ) $ 684 (Loss) earnings from discontinued operations (125 ) (2 ) (113 ) (97 ) Net (loss) earnings $ (612 ) $ 320 $ (345 ) $ 587 Denominator: Weighted-average shares used to compute basic net EPS 1,658 1,725 1,664 1,743 Dilutive effect of employee stock plans (1) — 26 — 22 Weighted-average shares used to compute diluted net EPS (1) 1,658 1,751 1,664 1,765 Basic net (loss) earnings per share: Continuing operations $ (0.29 ) $ 0.19 $ (0.14 ) $ 0.39 Discontinued operations (0.08 ) — (0.07 ) (0.06 ) Basic net (loss) earnings per share $ (0.37 ) $ 0.19 $ (0.21 ) $ 0.33 Diluted net (loss) earnings per share: (1) Continuing operations $ (0.29 ) $ 0.18 $ (0.14 ) $ 0.39 Discontinued operations (2) (0.08 ) — (0.07 ) (0.06 ) Diluted net (loss) earnings per share $ (0.37 ) $ 0.18 $ (0.21 ) $ 0.33 Anti-dilutive weighted-average stock awards (1) 85 46 90 51 (1) The Company excludes shares potentially issuable under employee stock plans that could dilute basic EPS in the future from the calculation of diluted net earnings (loss) per share, as their effect, if included, would have been anti-dilutive for the periods presented. (2) U.S. GAAP requires the denominator used in the diluted EPS calculation for discontinued operations to be the same as that of continuing operations, regardless of net earnings (loss) from continuing operations. |
Guarantees, Indemnifications 44
Guarantees, Indemnifications and Warranties (Tables) | 6 Months Ended |
Apr. 30, 2017 | |
Guarantees [Abstract] | |
Changes in aggregate product warranty liabilities and changes | The Company's aggregate product warranty liabilities as of April 30, 2017 , and changes during the six months ended April 30, 2017 were as follows: Six months ended In millions Balance at beginning of period $ 497 Accruals for warranties issued 167 Adjustments related to pre-existing warranties (including changes in estimates) (6 ) Settlements made (in cash or in kind) (159 ) Balance at end of period $ 499 |
Overview and Basis of Present45
Overview and Basis of Presentation (Details) - USD ($) $ in Millions | Apr. 01, 2017 | Sep. 07, 2016 | Nov. 01, 2015 | Apr. 30, 2017 | Oct. 31, 2016 |
Segment Reporting Information | |||||
Outstanding shares distributed | 100.00% | ||||
separation related adjustments | $ 1,200 | ||||
Former Parent Company | |||||
Segment Reporting Information | |||||
Distribution ratio | 1 | ||||
Shares distributed to shareholder (in shares) | 1,800,000,000 | ||||
Enterprise Services | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | |||||
Segment Reporting Information | |||||
Shares distributed to shareholder (in shares) | 0.085904 | ||||
Net cash transfer | $ 500 | $ 559 | |||
Shareholders | Non-Core Software Seattle SpinCo With Micro Focus | Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | |||||
Segment Reporting Information | |||||
Business acquisition percentage of voting interests expected to be acquired by entity shareholders | 50.10% | ||||
Dividends | $ 2,500 | ||||
Accounting Standards Update 2015-03 | Long-Term Financing Receivables And Other Assets | |||||
Segment Reporting Information | |||||
Deferred debt issuance costs | (50) | ||||
Accounting Standards Update 2015-03 | Notes Payable And Short-Term Borrowings And Long-Term Debt | |||||
Segment Reporting Information | |||||
Deferred debt issuance costs | $ 50 | ||||
Hewlett Packard Enterprise Company | Everett SpinCo | |||||
Segment Reporting Information | |||||
Debt | 3,500 | ||||
Dividends | 3,000 | ||||
Hewlett Packard Enterprise Company | Senior Notes | Everett SpinCo | |||||
Segment Reporting Information | |||||
Debt | 1,500 | ||||
Hewlett Packard Enterprise Company | Line of Credit | Everett SpinCo | |||||
Segment Reporting Information | |||||
Debt | $ 2,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) - Enterprise Services - Discontinued Operations, Disposed of by Means Other than Sale, Spinoff - USD ($) $ in Millions | Apr. 01, 2017 | Apr. 30, 2017 | Apr. 30, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Shares distributed to shareholder (in shares) | 0.085904 | ||
Term | 5 years | ||
Net cash transfer | $ 500 | $ 559 |
Discontinued Operations - Incom
Discontinued Operations - Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net loss from discontinued operations | $ (125) | $ (2) | $ (113) | $ (97) |
Enterprise Services | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net Revenue | 2,487 | 4,202 | 6,338 | 8,394 |
Cost of revenue | 2,073 | 3,601 | 5,357 | 7,312 |
Expenses | 643 | 560 | 1,203 | 1,129 |
Interest and other, net | 4 | 8 | 4 | 14 |
(Loss) earnings from discontinued operations before taxes | (233) | 33 | (226) | (61) |
Benefit (provision) for taxes | 108 | (35) | 113 | (36) |
Net loss from discontinued operations | $ (125) | $ (2) | $ (113) | $ (97) |
Discontinued Operations - Cash
Discontinued Operations - Cash flow (Details) - Enterprise Services - Discontinued Operations, Disposed of by Means Other than Sale, Spinoff - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Depreciation and amortization | $ 129 | $ 358 | $ 388 | $ 734 |
Purchases of property, plant and equipment | $ 53 | $ 224 | $ 131 | $ 486 |
Discontinued Operations - Balan
Discontinued Operations - Balance sheet (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total current assets of discontinued operations | $ 0 | $ 4,243 |
Total non-current assets of discontinued operations | 0 | 4,923 |
Total current liabilities of discontinued operations | 0 | 4,182 |
Total non-current liabilities of discontinued operations | $ 0 | 4,013 |
Enterprise Services | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Accounts receivable | 3,093 | |
Inventory | 34 | |
Other current assets | 1,116 | |
Total current assets of discontinued operations | 4,243 | |
Property, plant and equipment | 3,332 | |
Long-term financing receivables and other non-current assets | 1,591 | |
Total non-current assets of discontinued operations | 4,923 | |
Notes payable and short-term borrowings | 3 | |
Accounts payable | 933 | |
Employee compensation and benefits | 838 | |
Taxes on earnings | 55 | |
Deferred revenue | 849 | |
Other accrued liabilities | 1,504 | |
Total current liabilities of discontinued operations | 4,182 | |
Long-term debt | 392 | |
Other non-current liabilities | 3,621 | |
Total non-current liabilities of discontinued operations | $ 4,013 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Apr. 30, 2017USD ($)business_acquiredsegment | Oct. 31, 2016USD ($) | |
Segment Reporting [Abstract] | ||
Number of segments | segment | 4 | |
Advance royalty proceeds received from intercompany advanced royalty payments and licensing arrangements | $ | $ 439 | $ 3,700 |
Royalty recognition term | 5 years | |
Number of businesses acquired | business_acquired | 5 |
Segment Information - Earnings
Segment Information - Earnings Before Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Segment Reporting Information | ||||
Net revenue | $ (7,445) | $ (8,509) | $ (15,001) | $ (17,041) |
Total segment earnings from operations | 182 | 451 | 638 | 923 |
Stock-based compensation expense | (126) | (103) | (278) | (230) |
Amortization of intangible assets | (107) | (101) | (208) | (220) |
Restructuring charges | (118) | (87) | (234) | (253) |
Acquisition and other related charges | (51) | (43) | (95) | (80) |
Separation costs | (141) | (91) | (226) | (170) |
Interest and other, net | (85) | (52) | (163) | (126) |
Tax indemnification adjustments | 7 | (69) | (11) | (54) |
Loss from equity interests | (3) | 0 | (25) | 0 |
Earnings from continuing operations before taxes | 101 | 330 | 439 | 743 |
Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (7,800) | (8,893) | (15,669) | (17,807) |
Total segment earnings from operations | 769 | 1,053 | 1,760 | 2,177 |
Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (355) | (384) | (668) | (766) |
Significant Reconciling Items | ||||
Segment Reporting Information | ||||
Corporate and unallocated costs and eliminations | (90) | (177) | (161) | (301) |
Stock-based compensation expense | (96) | (103) | (219) | (230) |
Amortization of intangible assets | (107) | (101) | (208) | (220) |
Restructuring charges | (118) | (87) | (234) | (253) |
Acquisition and other related charges | (51) | (43) | (95) | (80) |
Separation costs | (141) | (91) | (226) | (170) |
Defined benefit plan settlement charges and remeasurement benefit | 16 | 0 | 21 | 0 |
Interest and other, net | (85) | (52) | (163) | (126) |
Tax indemnification adjustments | 7 | (69) | (11) | (54) |
Loss from equity interests | (3) | 0 | (25) | 0 |
Enterprise Group | ||||
Segment Reporting Information | ||||
Net revenue | (5,943) | (6,870) | (12,041) | (13,752) |
Enterprise Group | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (6,243) | (7,159) | (12,568) | (14,341) |
Total segment earnings from operations | 548 | 847 | 1,350 | 1,811 |
Enterprise Group | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (300) | (289) | (527) | (589) |
Software | ||||
Segment Reporting Information | ||||
Net revenue | (637) | (703) | (1,291) | (1,423) |
Software | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (685) | (774) | (1,406) | (1,554) |
Total segment earnings from operations | 181 | 192 | 335 | 328 |
Software | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (48) | (71) | (115) | (131) |
Financial Services | ||||
Segment Reporting Information | ||||
Net revenue | (865) | (764) | (1,669) | (1,518) |
Financial Services | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (872) | (788) | (1,695) | (1,564) |
Total segment earnings from operations | 78 | 73 | 156 | 173 |
Financial Services | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (7) | (24) | (26) | (46) |
Corporate Investments | ||||
Segment Reporting Information | ||||
Net revenue | 0 | (172) | 0 | (348) |
Corporate Investments | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | 0 | (172) | 0 | (348) |
Total segment earnings from operations | (38) | (59) | (81) | (135) |
Corporate Investments | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Segment Information - Subsegmen
Segment Information - Subsegments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Segment Reporting Information | ||||
Net revenue | $ (7,445) | $ (8,509) | $ (15,001) | $ (17,041) |
Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (7,800) | (8,893) | (15,669) | (17,807) |
Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (355) | (384) | (668) | (766) |
Enterprise Group | ||||
Segment Reporting Information | ||||
Net revenue | (5,943) | (6,870) | (12,041) | (13,752) |
Enterprise Group | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (6,243) | (7,159) | (12,568) | (14,341) |
Enterprise Group | Operating segments | Servers | ||||
Segment Reporting Information | ||||
Net revenue | (2,991) | (3,498) | (6,094) | (7,034) |
Enterprise Group | Operating segments | Technology Services | ||||
Segment Reporting Information | ||||
Net revenue | (1,971) | (2,019) | (3,914) | (4,004) |
Enterprise Group | Operating segments | Storage | ||||
Segment Reporting Information | ||||
Net revenue | (699) | (808) | (1,429) | (1,645) |
Enterprise Group | Operating segments | Networking | ||||
Segment Reporting Information | ||||
Net revenue | (582) | (834) | (1,131) | (1,658) |
Enterprise Group | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (300) | (289) | (527) | (589) |
Software | ||||
Segment Reporting Information | ||||
Net revenue | (637) | (703) | (1,291) | (1,423) |
Software | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (685) | (774) | (1,406) | (1,554) |
Software | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (48) | (71) | (115) | (131) |
Financial Services | ||||
Segment Reporting Information | ||||
Net revenue | (865) | (764) | (1,669) | (1,518) |
Financial Services | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | (872) | (788) | (1,695) | (1,564) |
Financial Services | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | (7) | (24) | (26) | (46) |
Corporate Investments | ||||
Segment Reporting Information | ||||
Net revenue | 0 | (172) | 0 | (348) |
Corporate Investments | Operating segments | ||||
Segment Reporting Information | ||||
Net revenue | 0 | (172) | 0 | (348) |
Corporate Investments | Elimination of intersegment net revenue and other | ||||
Segment Reporting Information | ||||
Net revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Restructuring (Details)
Restructuring (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 59 Months Ended | |||
Apr. 30, 2017USD ($)position | Apr. 30, 2016USD ($) | Apr. 30, 2017USD ($)position | Apr. 30, 2016USD ($) | Apr. 30, 2017USD ($)position | Oct. 31, 2016USD ($) | |
Restructuring Reserve | ||||||
Restructuring charges | $ 118 | $ 87 | $ 234 | $ 253 | ||
Short-term portion of restructuring reserve, recorded in Accrued restructuring | 228 | 228 | $ 228 | $ 301 | ||
Long-term portion of restructuring reserve, recorded in Other liabilities | 54 | 54 | 54 | $ 52 | ||
Restructuring Plan All | ||||||
Restructuring Reserve | ||||||
Liability as of October 31, 2016 | 353 | |||||
Restructuring charges | 234 | |||||
Cash payments | (257) | |||||
Non-cash items | (48) | |||||
Liability as of April 30, 2017 | 282 | 282 | 282 | |||
Total costs incurred to date, as of April 30, 2017 | 2,187 | 2,187 | 2,187 | |||
Total costs expected to be incurred, as of April 30, 2017 | $ 2,574 | $ 2,574 | $ 2,574 | |||
Fiscal 2015 Plan | ||||||
Restructuring Reserve | ||||||
Expected number of positions to be eliminated | position | 12,200 | |||||
Number of positions still to be eliminated | position | 4,000 | 4,000 | 4,000 | |||
Total costs expected to be incurred | $ 1,100 | $ 1,100 | $ 1,100 | |||
Fiscal 2015 Plan | Employee Severance | ||||||
Restructuring Reserve | ||||||
Liability as of October 31, 2016 | 277 | |||||
Restructuring charges | 198 | |||||
Cash payments | (221) | |||||
Non-cash items | (23) | |||||
Liability as of April 30, 2017 | 231 | 231 | 231 | |||
Total costs incurred to date, as of April 30, 2017 | 642 | 642 | 642 | |||
Total costs expected to be incurred, as of April 30, 2017 | 850 | 850 | 850 | |||
Total costs expected to be incurred | 800 | 800 | 800 | |||
Fiscal 2015 Plan | Infrastructure and other | ||||||
Restructuring Reserve | ||||||
Liability as of October 31, 2016 | 22 | |||||
Restructuring charges | 28 | |||||
Cash payments | (14) | |||||
Non-cash items | (19) | |||||
Liability as of April 30, 2017 | 17 | 17 | 17 | |||
Total costs incurred to date, as of April 30, 2017 | 86 | 86 | 86 | |||
Total costs expected to be incurred, as of April 30, 2017 | 265 | 265 | 265 | |||
Total costs expected to be incurred | 300 | 300 | 300 | |||
Fiscal 2012 Plan | ||||||
Restructuring Reserve | ||||||
Total costs incurred to date, as of April 30, 2017 | 1,400 | 1,400 | $ 1,400 | |||
Expected number of positions to be eliminated | position | 12,700 | |||||
Fiscal 2012 Plan | Employee Severance | ||||||
Restructuring Reserve | ||||||
Total costs incurred to date, as of April 30, 2017 | 1,200 | 1,200 | $ 1,200 | |||
Fiscal 2012 Plan | Infrastructure and other | ||||||
Restructuring Reserve | ||||||
Liability as of October 31, 2016 | 15 | |||||
Restructuring charges | 0 | |||||
Cash payments | (4) | |||||
Non-cash items | (8) | |||||
Liability as of April 30, 2017 | 3 | 3 | 3 | |||
Total costs incurred to date, as of April 30, 2017 | 222 | 222 | 222 | |||
Total costs expected to be incurred, as of April 30, 2017 | 222 | 222 | 222 | |||
Fiscal 2012 Plan | Employee Severance and EER | ||||||
Restructuring Reserve | ||||||
Liability as of October 31, 2016 | 39 | |||||
Restructuring charges | 8 | |||||
Cash payments | (18) | |||||
Non-cash items | 2 | |||||
Liability as of April 30, 2017 | 31 | 31 | 31 | |||
Total costs incurred to date, as of April 30, 2017 | 1,237 | 1,237 | 1,237 | |||
Total costs expected to be incurred, as of April 30, 2017 | 1,237 | 1,237 | $ 1,237 | |||
Enterprise Services | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | ||||||
Restructuring Reserve | ||||||
Restructuring charges | $ 98 | $ 74 | $ 159 | $ 219 |
Retirement and Post-Retiremen54
Retirement and Post-Retirement Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Oct. 31, 2016 | ||
Defined benefit plans | ||||||
Pension expense adjustment | $ 46 | $ 41 | $ 111 | $ 70 | ||
Defined benefit plan settlement charges and remeasurement benefit | [1] | 16 | 0 | 21 | 0 | |
Non-U.S. Defined Benefit Plans | ||||||
Net benefit (credit) cost | ||||||
Service cost | 30 | 50 | 70 | 100 | ||
Interest cost | 52 | 78 | 102 | 158 | ||
Expected return on plan assets | (131) | (161) | (264) | (331) | ||
Amortization and deferrals: | ||||||
Actuarial loss (gain) | 64 | 54 | 140 | 109 | ||
Prior service benefit | (4) | (4) | (8) | (9) | ||
Net periodic benefit cost | 11 | 17 | 40 | 27 | ||
Settlement loss | 3 | 1 | 3 | 1 | ||
Special termination benefits | 1 | 1 | 2 | 3 | ||
Plan expense allocation | (5) | (2) | (15) | (4) | ||
Net benefit cost from continuing operations | 10 | 17 | 30 | 27 | ||
Discontinued operations | 35 | 22 | 79 | 40 | ||
Net benefit cost | 45 | 39 | 109 | 67 | ||
Employer Contributions and Funding Policy | ||||||
Contributions to benefit plans | 2,100 | |||||
Expected contribution to defined benefit plans | 299 | $ 348 | ||||
Expected additional contribution to benefit plans as a result of impact of foreign currency | 79 | |||||
United States Pension Plans Of U S Entity Nonqualified Plan Participants | ||||||
Employer Contributions and Funding Policy | ||||||
Expected contribution to defined benefit plans | 2 | |||||
Expected additional contribution to benefit plans as a result of impact of foreign currency | 1 | |||||
Post-Retirement Benefit Plans | ||||||
Net benefit (credit) cost | ||||||
Service cost | 1 | 1 | 2 | 2 | ||
Interest cost | 1 | 2 | 2 | 4 | ||
Expected return on plan assets | 0 | 0 | 0 | (1) | ||
Amortization and deferrals: | ||||||
Actuarial loss (gain) | (1) | (1) | (2) | (2) | ||
Prior service benefit | 0 | 0 | 0 | 0 | ||
Net periodic benefit cost | 1 | 2 | 2 | 3 | ||
Settlement loss | 0 | 0 | 0 | 0 | ||
Special termination benefits | 0 | 0 | 0 | 0 | ||
Plan expense allocation | 0 | 0 | (1) | 0 | ||
Net benefit cost from continuing operations | 1 | 2 | 1 | 3 | ||
Discontinued operations | 0 | 0 | 1 | 0 | ||
Net benefit cost | 1 | $ 2 | 2 | $ 3 | ||
Employer Contributions and Funding Policy | ||||||
Expected contribution to defined benefit plans | 1 | $ 3 | ||||
Expected additional contribution to benefit plans as a result of impact of foreign currency | 2 | |||||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | ||||||
Defined benefit plans | ||||||
Pension expense adjustment | 23 | |||||
Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations, Spinoff | Non-U.S. Defined Benefit Plans | ||||||
Employer Contributions and Funding Policy | ||||||
Contributions to benefit plans | $ 1,900 | |||||
Net earnings (loss) from continuing operations | ||||||
Defined benefit plans | ||||||
Defined benefit plan settlement charges and remeasurement benefit | [1] | 16 | ||||
Income From Continuing Operations | ||||||
Defined benefit plans | ||||||
Defined benefit plan settlement charges and remeasurement benefit | [1] | $ 17 | ||||
[1] | Represents adjustments to the net periodic pension cost resulting from remeasurements of certain Hewlett Packard Enterprise pension plans due to plan separations in connection with the spin-off and merger of Everett SpinCo, Inc. with Computer Sciences Corporation. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 01, 2015 | Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Jan. 25, 2017 |
Stock-Based Compensation | ||||||
Stock-based compensation expense | $ 126 | $ 103 | $ 278 | $ 230 | ||
Income tax benefit | (41) | (30) | (89) | (67) | ||
Stock-based compensation expense from continuing operations, net of tax | 85 | 73 | 189 | 163 | ||
Separation costs | 141 | 91 | 226 | 170 | ||
Restructuring charges | $ 118 | 87 | $ 234 | 253 | ||
Restricted Stock Awards | ||||||
Shares | ||||||
Outstanding at beginning of period (in shares) | 57,321,000 | |||||
Granted and assumed through acquisition (in shares) | 21,405,000 | |||||
Additional shares granted due to conversion (in shares) | 12,902,000 | |||||
Vested (in shares) | (36,473,000) | |||||
Forfeited (in shares) | (2,079,000) | |||||
Outstanding at end of period (in shares) | 53,076,000 | 53,076,000 | ||||
Weighted-Average Grant Date Fair Value Per Share | ||||||
Outstanding at beginning of period (in dollars per share) | $ 15 | |||||
Granted and assumed through acquisition (in dollars per share) | 21 | |||||
Additional shares granted due to conversion (in dollars per share) | 18 | |||||
Vested (in dollars per share) | 16 | |||||
Forfeited (in dollars per share) | 17 | |||||
Outstanding at end of period (in dollars per share) | $ 18 | $ 18 | ||||
Unrecognized pre-tax stock-based compensation expense and recognition period | ||||||
Unrecognized pre-tax stock-based compensation expense | $ 524 | $ 524 | ||||
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 7 months 12 days | |||||
Stock Options | ||||||
Unrecognized pre-tax stock-based compensation expense and recognition period | ||||||
Unrecognized pre-tax stock-based compensation expense | $ 53 | $ 53 | ||||
Remaining weighted-average vesting period over which pre-tax stock-based compensation expense is expected to be recognized | 1 year 4 months 12 days | |||||
Weighted-average fair value and the assumptions used to measure fair value | ||||||
Weighted- average fair value (in dollars per share) | $ 6 | |||||
Expected volatility | 25.70% | |||||
Risk-free interest rate | 2.00% | |||||
Expected dividend yield | 1.00% | |||||
Expected term in years | 6 years 1 month 6 days | |||||
Shares | ||||||
Outstanding at beginning of period (in shares) | 57,498,000 | |||||
Granted and assumed through acquisition (in shares) | 5,242,000 | |||||
Additional shares granted due to conversion (in shares) | 12,574,000 | |||||
Exercised (in shares) | (16,281,000) | |||||
Forfeited/cancelled/expired (in shares) | (8,389,000) | |||||
Outstanding at end of period (in shares) | 50,644,000 | 50,644,000 | ||||
Vested and expected to vest at end of period (in shares) | 49,682,000 | 49,682,000 | ||||
Exercisable at end of period (in shares) | 28,811,000 | 28,811,000 | ||||
Weighted-Average Exercise Price | ||||||
Outstanding at beginning of period (in dollars per share) | $ 15 | |||||
Granted and assumed through acquisition (in dollars per share) | 24 | |||||
Additional shares granted due to conversion (in dollars per share) | 12 | |||||
Exercised (in dollars per share) | 14 | |||||
Forfeited/cancelled/expired (in dollars per share) | 16 | |||||
Outstanding at end of period (in dollars per share) | $ 12 | 12 | ||||
Vested and expected to vest at end of period (in dollars per share) | 12 | 12 | ||||
Exercisable at end of period (in dollars per share) | $ 11 | $ 11 | ||||
Options assumed (in shares) | 8,000,000 | |||||
Awards assumed (in dollars per share) | $ 16 | |||||
Weighted-Average Remaining Contractual Term | ||||||
Outstanding at end of period | 5 years | |||||
Vested and expected to vest at end of period | 5 years | |||||
Exercisable at end of period | 3 years 8 months 12 days | |||||
Aggregate Intrinsic Value | ||||||
Outstanding at end of period | $ 329 | $ 329 | ||||
Vested and expected to vest at end of period | 324 | 324 | ||||
Exercisable at end of period | 224 | 224 | ||||
Options exercised | 47 | 120 | ||||
The Plan | ||||||
Stock-Based Compensation | ||||||
Number of shares authorized (in shares) | 260,000,000 | 210,000,000 | ||||
Vesting period | 3 years | |||||
The Plan | One-time retention stock awards to certain executives | ||||||
Stock-Based Compensation | ||||||
Vesting period | 3 years | |||||
Total grant date fair value of options vested | $ 137 | |||||
The Plan | ||||||
Stock-Based Compensation | ||||||
Separation costs | 21 | 33 | ||||
Restructuring charges | 7 | 19 | ||||
SGI | The Plan | ||||||
Stock-Based Compensation | ||||||
Restructuring charges | 2 | $ 7 | ||||
Business Acquisitions | Restricted Stock Awards | ||||||
Shares | ||||||
Granted and assumed through acquisition (in shares) | 11,000,000 | |||||
Weighted-Average Grant Date Fair Value Per Share | ||||||
Granted and assumed through acquisition (in dollars per share) | $ 18 | |||||
Everett SpinCo | ||||||
Stock-Based Compensation | ||||||
Stock-based compensation expense | 83 | $ 95 | ||||
Everett SpinCo | Restricted Stock Awards | ||||||
Shares | ||||||
Vested (in shares) | (9,000,000) | |||||
Forfeited (in shares) | (300,000) | |||||
Weighted-Average Grant Date Fair Value Per Share | ||||||
Vested (in dollars per share) | $ 18 | |||||
Forfeited (in dollars per share) | $ 18 | |||||
Net loss from discontinued operations | ||||||
Stock-Based Compensation | ||||||
Stock-based compensation expense | 67 | $ 69 | ||||
Net earnings (loss) from continuing operations | ||||||
Stock-Based Compensation | ||||||
Stock-based compensation expense | 16 | 26 | ||||
Scenario, Adjustment | ||||||
Stock-Based Compensation | ||||||
Stock-based compensation expense | $ 78 | $ 35 | $ 100 | $ 73 |
Stock-Based Compensation - ESPP
Stock-Based Compensation - ESPP (Details) | Nov. 01, 2015shares | Apr. 30, 2017shares | Oct. 31, 2016shares |
Share-based compensation | |||
Common stock, shares authorized for employee stock purchase plan (in shares) | 9,600,000,000 | 9,600,000,000 | |
Hewlett Packard Enterprise Company 2015 ESPP | |||
Share-based compensation | |||
Common stock, shares authorized for employee stock purchase plan (in shares) | 80,000,000 | ||
Maximum contribution limit as percentage of base compensation (as a percent) | 10.00% | ||
Maximum discount percentage | 0.15 | ||
Offering period | 24 months | ||
Current offering period | 6 months | ||
Stock purchase price as a percentage of the fair market value on the purchase date | 95.00% |
Taxes on Earnings (Details)
Taxes on Earnings (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Apr. 30, 2017USD ($) | Apr. 30, 2016USD ($) | Apr. 30, 2017USD ($)country | Apr. 30, 2016USD ($) | Oct. 31, 2016USD ($) | |
Differences between the U.S. federal statutory income tax rate and HP's effective tax rate | |||||
Effective tax rate (as a percent) | 582.20% | 2.40% | 152.80% | 7.90% | |
Valuation allowance | $ 473 | $ 473 | |||
Accrued divestiture tax | 110 | $ 110 | |||
U.S. federal statutory income tax rate (as a percent) | 35.00% | ||||
Net income tax charges (benefits) related to discrete items | 506 | $ (92) | $ 471 | $ (174) | |
Other benefits | (473) | ||||
Income tax charges for various prior period adjustments | (79) | $ (141) | |||
Number of countries other than the United States where the entity is subject to income tax | country | 110 | ||||
Unrecognized tax benefits | 11,500 | $ 11,500 | $ 11,400 | ||
Unrecognized tax benefits that would affect effective tax rate if realized | 3,000 | 3,000 | 2,900 | ||
Accrued income tax for interest and penalties | 403 | $ 403 | 394 | ||
Likelihood of no resolution period | 12 months | ||||
Reasonably possible reduction in existing unrecognized tax benefits within the next 12 months | 2,700 | $ 2,700 | |||
Likelihood of conclusion period for certain federal, foreign and state tax issues | 12 months | ||||
Deferred tax assets - long-term | 3,491 | $ 3,491 | 3,830 | ||
Deferred tax liabilities - long-term | (83) | (83) | (98) | ||
Deferred tax assets net of deferred tax liabilities | $ 3,408 | 3,408 | 3,732 | ||
Advance royalty proceeds received from multi-year intercompany licensing arrangements | $ 439 | $ 3,700 | |||
Royalty recognition term | 5 years |
Balance Sheet Details (Details)
Balance Sheet Details (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2017 | Oct. 31, 2016 | |
Accounts Receivable, Net | |||
Accounts receivable, billed | $ 3,585 | $ 3,681 | |
Unbilled receivable | 267 | 191 | |
Accounts receivable, gross | 3,852 | 3,872 | |
Allowance for doubtful accounts | $ (56) | (42) | (56) |
Total | 3,810 | 3,816 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | 56 | ||
Deductions, net of recoveries | (14) | ||
Balance at end of period | 42 | ||
Trade receivables sold and cash received | |||
Balance at beginning of period | 145 | ||
Trade receivables sold | 1,541 | ||
Cash receipts | (1,624) | ||
Foreign currency and other | (1) | ||
Balance at end of period | $ 61 | ||
Inventory, Net [Abstract] | |||
Finished goods | 1,218 | 1,182 | |
Purchased parts and fabricated assemblies | 823 | 558 | |
Inventory [Line Items] | |||
Total | 2,041 | $ 1,740 | |
SGI | |||
Inventory [Line Items] | |||
Total | $ 118 |
Balance Sheet Details - Other C
Balance Sheet Details - Other Current Assets (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Value-added taxes receivable | $ 673 | $ 762 |
Manufacturer and other receivables | 1,055 | 1,010 |
Prepaid and other current assets | 1,364 | 999 |
Total | $ 3,092 | $ 2,771 |
Balance Sheet Details - PPE (De
Balance Sheet Details - PPE (Details) - USD ($) $ in Millions | 6 Months Ended | |
Apr. 30, 2017 | Oct. 31, 2016 | |
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 12,738 | $ 12,924 |
Accumulated depreciation | (6,046) | (6,620) |
Total | 6,692 | 6,304 |
Purchase of property, plant and equipment | 1,490 | |
Acquisition | 252 | |
Sales and retirements of PP&E | 1,928 | |
Accumulated depreciation on sale and retirement of property, plant and equipment | 1,074 | |
Land | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | 313 | 353 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | 2,689 | 3,547 |
Machinery and equipment, including equipment held for lease | ||
Property, Plant and Equipment, Net | ||
Property, plant and equipment, gross | $ 9,736 | $ 9,024 |
Balance Sheet Details - Other A
Balance Sheet Details - Other Assets (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Financing receivables, net | $ 3,953 | $ 4,584 |
Deferred tax assets | 3,491 | 3,830 |
Prepaid pension assets | 577 | 365 |
Other | 2,826 | 2,796 |
Total | $ 10,847 | $ 11,575 |
Balance Sheet Details - Other62
Balance Sheet Details - Other Accrued Liabilities (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Accrued taxes - other | $ 830 | $ 866 |
Warranty - short-term | 274 | 258 |
Sales and marketing programs | 764 | 853 |
Other | 2,505 | 1,880 |
Total | $ 4,373 | $ 3,857 |
Balance Sheet Details - Other L
Balance Sheet Details - Other Liabilities (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Pension, post-retirement and post-employment liabilities | $ 1,779 | $ 2,101 |
Deferred revenue - long-term | 2,624 | 2,485 |
Tax liability - long-term | 3,518 | 3,950 |
Other long-term liabilities | 1,020 | 865 |
Total | $ 8,941 | $ 9,401 |
Financing Receivables and Ope64
Financing Receivables and Operating Leases (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Apr. 30, 2017 | Apr. 30, 2016 | Oct. 31, 2016 | Oct. 31, 2015 | |
Leases [Abstract] | ||||
Financing receivable term, low end of range | 2 years | |||
Financing receivable term, high end of range | 5 years | |||
Minimum lease payments receivable | $ 7,615 | $ 8,480 | ||
Unguaranteed residual value | 242 | 231 | ||
Unearned income | (595) | (678) | ||
Financing receivables, gross | 7,262 | 8,033 | ||
Allowance for doubtful accounts | (80) | (89) | $ (95) | |
Financing receivables, net | 7,182 | 7,944 | ||
Less: current portion | (3,229) | (3,360) | ||
Amounts due after one year, net | 3,953 | $ 4,584 | ||
Sold | $ 95 | $ 67 |
Financing Receivables and Ope65
Financing Receivables and Operating Leases - Aging and Allowance (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Apr. 30, 2017 | Oct. 31, 2016 | Apr. 30, 2017 | Oct. 31, 2016 | |
Gross financing receivables | ||||
Period past due, after which a write-off or specific reserve is created | 180 days | |||
Allowance for doubtful accounts | ||||
Balance at beginning of period | $ 89 | $ 95 | ||
Provision for doubtful accounts | 8 | 11 | ||
Write-offs | (17) | (17) | ||
Balance at end of period | 80 | 89 | ||
Gross financing receivables collectively evaluated for loss | $ 6,974 | $ 7,750 | ||
Gross financing receivables individually evaluated for loss | 288 | 283 | ||
Financing receivables, gross | 7,262 | 8,033 | ||
Allowance for financing receivables collectively evaluated for loss | 62 | 73 | ||
Allowance for financing receivables individually evaluated for loss | 18 | 16 | ||
Total | $ 89 | $ 95 | 80 | 89 |
Period past due, after which account is put on non-accrual status | 90 days | |||
Aging and non-accrual status of gross financing receivables | ||||
Current 1-30 days | 311 | 389 | ||
Past due 31-60 days | 34 | 54 | ||
Past due 61-90 days | 36 | 14 | ||
Past due 90 days | 55 | 68 | ||
Unbilled sales-type and direct-financing lease receivables | 6,826 | 7,508 | ||
Gross financing receivables on non-accrual status | 181 | 163 | ||
Gross financing receivables 90 days past due and still accruing interest | 107 | 120 | ||
Operating lease assets | ||||
Equipment leased to customers | 7,593 | 5,467 | ||
Accumulated depreciation | (2,900) | (2,134) | ||
Operating lease assets, net | 4,693 | 3,333 | ||
Low | ||||
Allowance for doubtful accounts | ||||
Financing receivables, gross | 3,826 | 4,027 | ||
Moderate | ||||
Allowance for doubtful accounts | ||||
Financing receivables, gross | 3,337 | 3,909 | ||
High | ||||
Allowance for doubtful accounts | ||||
Financing receivables, gross | $ 99 | $ 97 |
Acquisitions (Details)
Acquisitions (Details) $ in Millions | Apr. 17, 2017USD ($) | Feb. 17, 2017USD ($) | Nov. 30, 2016USD ($) | Apr. 30, 2017USD ($)business_acquired | Oct. 31, 2016USD ($) |
Acquisitions: | |||||
Number of businesses acquired | business_acquired | 5 | ||||
Goodwill | $ 25,498 | $ 24,178 | |||
Q2 2017 YTD Acquisitions | |||||
Acquisitions: | |||||
Goodwill | 1,323 | ||||
Amortizable intangible assets | 579 | ||||
Net assets assumed | 319 | ||||
Total fair value consideration | 2,306 | ||||
SGI | |||||
Acquisitions: | |||||
Consideration | $ 349 | ||||
Goodwill | 74 | ||||
Amortizable intangible assets | $ 150 | ||||
Useful life | 5 years | ||||
SimpliVity | |||||
Acquisitions: | |||||
Consideration | $ 651 | ||||
Goodwill | 430 | ||||
Amortizable intangible assets | $ 116 | ||||
Useful life | 5 years | ||||
Nimble Storage, Inc. | |||||
Acquisitions: | |||||
Consideration | $ 1,300 | ||||
Goodwill | 787 | ||||
Amortizable intangible assets | $ 288 | ||||
Useful life | 5 years | ||||
In-process research and development | Q2 2017 YTD Acquisitions | |||||
Acquisitions: | |||||
Amortizable intangible assets | $ 85 | ||||
In-process research and development | SGI | |||||
Acquisitions: | |||||
Amortizable intangible assets | $ 30 | ||||
In-process research and development | SimpliVity | |||||
Acquisitions: | |||||
Amortizable intangible assets | $ 25 | ||||
In-process research and development | Nimble Storage, Inc. | |||||
Acquisitions: | |||||
Amortizable intangible assets | $ 30 |
Goodwill and Intangible Asset67
Goodwill and Intangible Assets (Details) $ in Millions | 6 Months Ended |
Apr. 30, 2017USD ($) | |
Goodwill | |
Balance at beginning of period | $ 24,178 |
Goodwill acquired during the period | 1,323 |
Changes due to foreign currency | (1) |
Goodwill adjustments | (2) |
Balance at end of period | 25,498 |
Enterprise Group | |
Goodwill | |
Balance at beginning of period | 15,945 |
Goodwill acquired during the period | 1,323 |
Changes due to foreign currency | (1) |
Goodwill adjustments | (2) |
Balance at end of period | 17,265 |
Software | |
Goodwill | |
Balance at beginning of period | 8,089 |
Goodwill acquired during the period | 0 |
Changes due to foreign currency | 0 |
Goodwill adjustments | 0 |
Balance at end of period | 8,089 |
Financial Services | |
Goodwill | |
Balance at beginning of period | 144 |
Goodwill acquired during the period | 0 |
Changes due to foreign currency | 0 |
Goodwill adjustments | 0 |
Balance at end of period | $ 144 |
Goodwill and Intangible Asset68
Goodwill and Intangible Assets - Intangibles (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Oct. 31, 2016 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | $ 6,353 | $ 6,353 | $ 5,762 | ||
Amortizable intangible assets, accumulated amortization | (1,710) | (1,710) | (1,575) | ||
Finite-lived Intangible Assets, Accumulated Impairment Losses | (3,103) | (3,103) | |||
Total Intangible Assets- Net | 1,540 | 1,540 | 1,084 | ||
Amortizable intangible assets, net | 1,455 | 1,455 | |||
Fully amortized intangibles | 73 | 73 | |||
Amortization of intangible assets | 107 | $ 101 | 208 | $ 220 | |
SGI | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 579 | 579 | |||
In-process research and development | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortizable intangible assets, gross | 85 | 85 | 0 | ||
Amortizable intangible assets, accumulated amortization | 0 | 0 | 0 | ||
Finite-lived Intangible Assets, Accumulated Impairment Losses | 0 | 0 | |||
Amortizable intangible assets, net | 85 | 85 | 0 | ||
In-process research and development | SGI | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 85 | 85 | |||
Customer contracts, customer lists and distribution agreements | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortizable intangible assets, gross | 1,488 | 1,488 | 1,394 | ||
Amortizable intangible assets, accumulated amortization | (305) | (305) | (322) | ||
Finite-lived Intangible Assets, Accumulated Impairment Losses | (856) | (856) | |||
Amortizable intangible assets, net | 327 | 327 | 216 | ||
Developed and core technology and patents | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortizable intangible assets, gross | 4,565 | 4,565 | 4,190 | ||
Amortizable intangible assets, accumulated amortization | (1,378) | (1,378) | (1,232) | ||
Finite-lived Intangible Assets, Accumulated Impairment Losses | (2,138) | (2,138) | |||
Amortizable intangible assets, net | 1,049 | 1,049 | 820 | ||
Trade name and trademarks | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortizable intangible assets, gross | 215 | 215 | 178 | ||
Amortizable intangible assets, accumulated amortization | (27) | (27) | (21) | ||
Finite-lived Intangible Assets, Accumulated Impairment Losses | (109) | (109) | |||
Amortizable intangible assets, net | $ 79 | $ 79 | $ 48 |
Goodwill and Intangible Asset69
Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Millions | Apr. 30, 2017USD ($) |
Estimated future amortization expense related to finite-lived purchased intangible assets | |
2017 (remaining 6 months) | $ 243 |
2,018 | 383 |
2,019 | 306 |
2,020 | 248 |
2,021 | 106 |
2,022 | 78 |
Thereafter | 91 |
Total | $ 1,455 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Fair Value and Carrying Value of Debt | ||
Fair value, short-term and long-term debt | $ 14,000 | $ 15,800 |
Carrying value, short-term and long-term debt | 13,900 | 15,700 |
Fair Value, Measurements, Recurring | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 5,996 | 11,474 |
Total liabilities | 387 | 219 |
Fair Value, Measurements, Recurring | Time deposits | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2,446 | 4,035 |
Fair Value, Measurements, Recurring | Money market funds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2,845 | 6,495 |
Fair Value, Measurements, Recurring | Equity securities in public companies | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 21 | 16 |
Fair Value, Measurements, Recurring | Foreign bonds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 222 | 180 |
Fair Value, Measurements, Recurring | Other debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 27 | 28 |
Fair Value, Measurements, Recurring | Interest rate contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 0 | 109 |
Total liabilities | 122 | 6 |
Fair Value, Measurements, Recurring | Foreign exchange contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 433 | 611 |
Total liabilities | 265 | 211 |
Fair Value, Measurements, Recurring | Other derivatives | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2 | 0 |
Total liabilities | 0 | 2 |
Fair Value, Measurements, Recurring | Level 1 | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2,874 | 6,511 |
Fair Value, Measurements, Recurring | Level 1 | Money market funds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2,845 | 6,495 |
Fair Value, Measurements, Recurring | Level 1 | Equity securities in public companies | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 21 | 16 |
Fair Value, Measurements, Recurring | Level 1 | Foreign bonds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 8 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 3,095 | 4,935 |
Total liabilities | 387 | 219 |
Fair Value, Measurements, Recurring | Level 2 | Time deposits | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2,446 | 4,035 |
Fair Value, Measurements, Recurring | Level 2 | Foreign bonds | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 214 | 180 |
Fair Value, Measurements, Recurring | Level 2 | Interest rate contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 0 | 109 |
Total liabilities | 122 | 6 |
Fair Value, Measurements, Recurring | Level 2 | Foreign exchange contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 433 | 611 |
Total liabilities | 265 | 211 |
Fair Value, Measurements, Recurring | Level 2 | Other derivatives | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 2 | 0 |
Total liabilities | 0 | 2 |
Fair Value, Measurements, Recurring | Level 3 | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 27 | 28 |
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Other debt securities | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total assets | 27 | 28 |
Fair Value, Measurements, Recurring | Level 3 | Interest rate contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Foreign exchange contracts | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Other derivatives | ||
Financial assets and liabilities measured at fair value on a recurring basis | ||
Total liabilities | $ 0 | $ 0 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Gain | $ 39 | $ 49 |
Gross Unrealized Loss | (12) | (16) |
Debt securities: | ||
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Gain | 38 | 49 |
Gross Unrealized Loss | (12) | (12) |
Foreign bonds | ||
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Gain | 38 | 49 |
Other debt securities | ||
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Loss | (12) | (12) |
Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Gain | 1 | 0 |
Gross Unrealized Loss | 0 | (4) |
Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Gross Unrealized Gain | 1 | 0 |
Gross Unrealized Loss | 0 | (4) |
Cost | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | 5,280 | 10,519 |
Available-for-sale securities, Cost | 254 | 202 |
Total cash equivalents and available-for-sale investments | 5,534 | 10,721 |
Cost | Debt securities: | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 234 | 182 |
Cost | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 11 | 11 |
Cost | Foreign bonds | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 184 | 131 |
Cost | Other debt securities | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 39 | 40 |
Cost | Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 20 | 20 |
Cost | Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Cost | 20 | 20 |
Cost | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | 2,435 | 4,024 |
Cost | Money market funds | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | 2,845 | 6,495 |
Fair Value | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | 5,280 | 10,519 |
Available-for-sale securities, Estimated Fair Value | 281 | 235 |
Total cash equivalents and available-for-sale investments | 5,561 | 10,754 |
Fair Value | Debt securities: | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 260 | 219 |
Fair Value | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 11 | 11 |
Fair Value | Foreign bonds | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 222 | 180 |
Fair Value | Other debt securities | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 27 | 28 |
Fair Value | Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 21 | 16 |
Fair Value | Equity securities in public companies | ||
Cash and Cash Equivalents [Line Items] | ||
Available-for-sale securities, Estimated Fair Value | 21 | 16 |
Fair Value | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | 2,435 | 4,024 |
Fair Value | Money market funds | ||
Cash and Cash Equivalents [Line Items] | ||
Cash Equivalents: | $ 2,845 | $ 6,495 |
Financial Instruments - Contrac
Financial Instruments - Contractual Maturities (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Amortized Cost | ||
Due in more than five years | $ 234 | |
Fair Value | ||
Due in more than five years | 260 | |
Investments in equity interests | 2,620 | $ 2,648 |
Equity securities in privately held companies | Long-Term Financing Receivables and Other Assets | ||
Fair Value | ||
Investment amount | $ 145 | $ 128 |
Financial Instruments - Hedges
Financial Instruments - Hedges (Details) - USD ($) $ in Millions | 6 Months Ended | |
Apr. 30, 2017 | Oct. 31, 2016 | |
Derivatives, Fair Value | ||
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 | $ 137 | $ 9 |
Outstanding Gross Notional | 28,489 | 34,472 |
Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 321 | 400 |
Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 114 | 320 |
Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 199 | 159 |
Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 188 | 60 |
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 | ||
Outstanding Gross Notional | $ 18,915 | 17,841 |
Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 199 | 300 |
Derivatives designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 112 | 309 |
Derivatives designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 113 | 54 |
Derivatives designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 184 | 49 |
Derivatives designated as hedging instruments | Fair value hedges: | Interest rate contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 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 | 0 | 109 |
Derivatives designated as hedging instruments | Fair value hedges: | Interest rate contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 122 | 6 |
Derivatives designated as hedging instruments | Cash flow hedges: | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 7,483 | 6,450 |
Derivatives designated as hedging instruments | Cash flow hedges: | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 159 | 247 |
Derivatives designated as hedging instruments | Cash flow hedges: | Foreign exchange contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 91 | 172 |
Derivatives designated as hedging instruments | Cash flow hedges: | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 79 | 31 |
Derivatives designated as hedging instruments | Cash flow hedges: | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 25 | 15 |
Derivatives designated as hedging instruments | Net investment hedges: | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 1,932 | 1,891 |
Derivatives designated as hedging instruments | Net investment hedges: | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 40 | 53 |
Derivatives designated as hedging instruments | Net investment hedges: | Foreign exchange contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 21 | 28 |
Derivatives designated as hedging instruments | Net investment hedges: | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 34 | 23 |
Derivatives designated as hedging instruments | Net investment hedges: | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 37 | 28 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 9,574 | 16,631 |
Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 122 | 100 |
Derivatives not designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 2 | 11 |
Derivatives not designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 86 | 105 |
Derivatives not designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 4 | 11 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 9,472 | 16,496 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 120 | 100 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 2 | 11 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 86 | 103 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 4 | 11 |
Derivatives not designated as hedging instruments | Other derivatives | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 102 | 135 |
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 2 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 0 | $ 2 |
Financial Instruments - Gross N
Financial Instruments - Gross Notional FV and Offsetting (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 |
Derivative assets | ||
Gross Amount Recognized | $ 435 | $ 720 |
Net Amount Presented | 435 | 720 |
Gross Amounts Not Offset | ||
Derivatives | 247 | 207 |
Financial Collateral | 141 | 465 |
Net Amount | 47 | 48 |
Derivative liabilities | ||
Gross Amount Recognized | 387 | 219 |
Net Amount Presented | 387 | 219 |
Gross Amounts Not Offset | ||
Derivatives | 247 | 207 |
Financial Collateral | 177 | 10 |
Net Amount | (37) | $ 2 |
Financial Collateral | 226 | |
Cash collateral | $ 49 |
Financial Instruments - Pre-tax
Financial Instruments - Pre-tax Effect (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Net revenue | $ 7,445 | $ 8,509 | $ 15,001 | $ 17,041 |
Cost of products | (7,263) | (8,058) | (14,363) | (16,118) |
Interest and other, net | (85) | (52) | (163) | (126) |
Earnings from continuing operations before taxes | 101 | 330 | 439 | 743 |
Net loss from discontinued operations | (125) | (2) | (113) | (97) |
Net (loss) earnings | (612) | 320 | (345) | 587 |
Pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated and Combined Statements of Earnings | ||||
Gains (Losses) Recognized in Earnings on Derivatives | (198) | (326) | (242) | (323) |
Interest rate contracts | ||||
Pre-tax effect of derivative instruments and related hedged items in a fair value hedging relationship | ||||
Gains (Losses) Recognized in Earnings on Derivative | 37 | 34 | (225) | 167 |
Gains (Losses) Recognized in Earnings on Related Hedged Item | (37) | (34) | 225 | (167) |
Foreign exchange contracts | Interest and other, net | ||||
Pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated and Combined Statements of Earnings | ||||
Gains (Losses) Recognized in Earnings on Derivatives | (199) | (331) | (246) | (323) |
Other derivatives | Interest and other, net | ||||
Pre-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated and Combined Statements of Earnings | ||||
Gains (Losses) Recognized in Earnings on Derivatives | 1 | 5 | 4 | 0 |
Cash flow hedges: | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Loss expected to be reclassified from Accumulated OCI into earnings in next 12 months | 47 | |||
Cash flow hedges: | Foreign exchange contracts | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | 4 | (206) | 140 | (64) |
Cash flow hedges: | Foreign exchange contracts | Change in net unrealized losses on cash flow hedges: | Reclassifications of gains (losses) into earnings | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Net revenue | 2 | (13) | 58 | 28 |
Cost of products | 0 | 0 | ||
Other operating expenses | 0 | 0 | 0 | 0 |
Interest and other, net | 66 | 66 | 149 | 125 |
Earnings from continuing operations before taxes | 68 | 53 | 207 | 153 |
Net loss from discontinued operations | 15 | 17 | 39 | 38 |
Net (loss) earnings | 83 | 70 | 246 | 191 |
Cash flow hedges: | Foreign exchange contracts | Net revenue | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (56) | (192) | (1) | (153) |
Cash flow hedges: | Foreign exchange contracts | Cost of products | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (1) | (1) | ||
Cash flow hedges: | Foreign exchange contracts | Other operating expenses | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | 1 | 3 | 1 | 2 |
Cash flow hedges: | Foreign exchange contracts | Interest and other, net | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | 66 | 61 | 142 | 119 |
Cash flow hedges: | Foreign exchange contracts | Net earnings (loss) from continuing operations | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | 10 | (128) | 141 | (32) |
Cash flow hedges: | Foreign exchange contracts | Net loss from discontinued operations | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (6) | (78) | (1) | (32) |
Net investment hedges: | Foreign exchange contracts | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (8) | (137) | (10) | (80) |
Net investment hedges: | Foreign exchange contracts | Change in net unrealized losses on cash flow hedges: | Reclassifications of gains (losses) into earnings | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Interest and other, net | 0 | 0 | 0 | 0 |
Earnings from continuing operations before taxes | 0 | 0 | 0 | 0 |
Net loss from discontinued operations | 0 | 0 | 0 | 0 |
Net (loss) earnings | 0 | 0 | 0 | 0 |
Net investment hedges: | Foreign exchange contracts | Interest and other, net | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (8) | (137) | (10) | (80) |
Net investment hedges: | Foreign exchange contracts | Net earnings (loss) from continuing operations | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | (8) | (137) | (10) | (80) |
Net investment hedges: | Foreign exchange contracts | Net loss from discontinued operations | ||||
Pre-tax effect of derivative instruments in cash flow and net investment hedging relationships | ||||
Gains (Losses) Recognized in Other Comprehensive Income (OCI) on Derivatives (Effective Portion) | $ 0 | $ 0 | $ 0 | $ 0 |
Borrowings (Details)
Borrowings (Details) - USD ($) $ in Millions | Apr. 30, 2017 | Oct. 31, 2016 | |
Notes Payable and Short-Term Borrowings | |||
Current portion of long-term debt | $ 1,217 | $ 2,772 | |
Amount outstanding | [1] | $ 2,010 | $ 3,527 |
Current portion of long-term debt | 2.60% | 1.70% | |
FS Commercial paper | |||
Notes Payable and Short-Term Borrowings | |||
Amount outstanding | $ 343 | $ 326 | |
Weighted average interest rate (as a percent) | 0.00% | 0.10% | |
Obligation related to notes payable to banks, lines of credit, uncommitted line of credit and other debt | |||
Notes Payable and Short-Term Borrowings | |||
Amount outstanding | $ 450 | $ 429 | |
Weighted average interest rate (as a percent) | 2.20% | 2.00% | |
Obligation related to notes payable to banks, lines of credit, uncommitted line of credit and other debt | Financial Services | |||
Notes Payable and Short-Term Borrowings | |||
Short term borrowings | $ 404 | $ 381 | |
[1] | During the first quarter of fiscal 2017, the Company adopted ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company adopted the standard retrospectively for the prior period presented. |
Borrowings -Term Debt (Details)
Borrowings -Term Debt (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Apr. 01, 2017 | Oct. 31, 2016 | ||
Debt Instrument [Line Items] | |||||||
Total | [1] | $ 11,904,000,000 | $ 11,904,000,000 | $ 12,168,000,000 | |||
Fair value adjustment related to hedged debt | (122,000,000) | (122,000,000) | 103,000,000 | ||||
Unamortized debt issuance costs(3) | (47,000,000) | (47,000,000) | (50,000,000) | ||||
Less: current portion | (1,217,000,000) | (1,217,000,000) | (2,772,000,000) | ||||
Face amount of debt instrument | $ 3,500,000,000 | ||||||
Interest expense on borrowings recognized in Condensed Consolidated and Combined Statements of Earnings | |||||||
Financing interest | 65,000,000 | $ 61,000,000 | 131,000,000 | $ 119,000,000 | |||
Interest expense | 77,000,000 | 79,000,000 | 169,000,000 | 152,000,000 | |||
Total interest expense | 142,000,000 | $ 140,000,000 | 300,000,000 | $ 271,000,000 | |||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | $ 750,000,000 | $ 750,000,000 | 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 | |||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
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 | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Total | 2,648,000,000 | 2,648,000,000 | 2,648,000,000 | ||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | $ 2,999,000,000 | $ 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 | |||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
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 | |||||
$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 | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Total | 1,348,000,000 | 1,348,000,000 | 1,348,000,000 | ||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | $ 2,494,000,000 | $ 2,494,000,000 | 2,494,000,000 | ||||
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 | |||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | $ 750,000,000 | $ 750,000,000 | 750,000,000 | ||||
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 | |||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | $ 1,499,000,000 | $ 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 | |||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | 350,000,000 | 350,000,000 | 350,000,000 | ||||
$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 | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | 350,000,000 | $ 350,000,000 | |||||
Basis spread | 1.74% | ||||||
$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 | |||||||
Debt Instrument [Line Items] | |||||||
Total | 250,000,000 | $ 250,000,000 | 250,000,000 | ||||
$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 | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | 250,000,000 | $ 250,000,000 | |||||
Basis spread | 1.93% | ||||||
Other, including capital lease obligations, at 0.00%-8.47%, due in calendar years 2016-2022 | |||||||
Debt Instrument [Line Items] | |||||||
Other, including capital lease obligations | $ 202,000,000 | $ 202,000,000 | 300,000,000 | ||||
Minimum interest rate (as a percent) | 0.00% | ||||||
Maximum interest rate (as a percent) | 6.05% | ||||||
Other, including capital lease obligations, at 0.00%-8.47%, due in calendar years 2016-2022 | Financial Services | |||||||
Debt Instrument [Line Items] | |||||||
Other, including capital lease obligations | $ 136,000,000 | $ 136,000,000 | $ 181,000,000 | ||||
[1] | During the first quarter of fiscal 2017, the Company adopted ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability rather than an asset that is amortized. The Company adopted the standard retrospectively for the prior period presented. |
Borrowings - Interest Expense a
Borrowings - Interest Expense and Other (Details) | Apr. 28, 2017USD ($) | Apr. 01, 2017USD ($) | Nov. 01, 2015USD ($)extension_term | Apr. 30, 2017USD ($)commercial_paper_program |
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 3,500,000,000 | |||
$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 | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 2,250,000,000 | |||
Debt redeemed | $ 1,500,000,000 | |||
Redemption price | $ 1,508,000,000 | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Interest rate swap value | 9,500,000,000 | |||
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | 2,000,000,000 | |||
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Available borrowing resources | 1,802,000,000 | |||
Unsecured revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Amount available under credit facility | $ 4,000,000,000 | |||
Term of credit facility | 5 years | |||
Debt Instrument, Number of Extension Terms | extension_term | 2 | |||
Debt Instrument, Extension Term | 1 year | |||
FS Commercial paper | ||||
Debt Instrument [Line Items] | ||||
Available borrowing resources | 4,157,000,000 | |||
Maximum borrowing capacity approved by the Board of Directors | $ 4,000,000,000 | |||
Hewlett-Packard Enterprise | FS Commercial paper | ||||
Debt Instrument [Line Items] | ||||
Number of commercial paper programs | commercial_paper_program | 2 | |||
Hewlett-Packard Enterprise | FS Commercial paper | U.S. program | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity under credit facility | $ 4,000,000,000 | |||
Hewlett-Packard Enterprise | FS Commercial paper | Euro program | ||||
Debt Instrument [Line Items] | ||||
Amount of additional commercial paper authorization for subsidiaries | 500,000,000 | |||
Maximum borrowing capacity under credit facility | 3,000,000,000 | |||
Hewlett-Packard International Bank PLC | FS Commercial paper | Euro Commercial Paper/Certificate of Deposit Programme | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity under credit facility | 500,000,000 | |||
HP, Inc. | ||||
Debt Instrument [Line Items] | ||||
Dividends | 3,000,000,000 | 3,000,000,000 | ||
Enterprise Services | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | ||||
Debt Instrument [Line Items] | ||||
Net cash transfer | $ 500,000,000 | $ 559,000,000 |
Related Party Transactions an79
Related Party Transactions and Former Parent Company Investment (Details) $ in Millions | 1 Months Ended |
Dec. 31, 2015USD ($) | |
Former Parent Company of reporting entity | |
Related Party Transactions | |
Final cash allocation from former Parent | $ 526 |
Stockholders' Equity - Rollforw
Stockholders' Equity - Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at beginning of period | $ 31,518 | |||
Everett Transaction | (1,349) | |||
Net loss | (349) | |||
Other comprehensive income, net of taxes | $ 1 | $ (75) | 476 | $ (152) |
Comprehensive income | 127 | |||
Repurchase of common stock | (1,350) | |||
Cash dividends declared | (324) | |||
Stock-based compensation expense | 378 | |||
Other | 47 | |||
Balance at end of period | 29,047 | 29,047 | ||
Net loss attributable to parent | $ 612 | $ (320) | 345 | $ (587) |
Net loss attributable to noncontrolling interests | 4 | |||
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Everett Transaction | 3,900 | |||
Noncontrolling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Everett Transaction | 30 | |||
AOCI Including Portion Attributable to Noncontrolling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Everett Transaction | 2,600 | |||
Unallocated | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 219 | |||
Income From Discontinued Operations | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 100 | |||
Separation Costs | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 33 | |||
Restructuring Charges | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 19 | |||
Acquisition-related Costs | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | $ 7 |
Stockholders' Equity - Reclassi
Stockholders' Equity - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Taxes on change in net unrealized (losses) gains on available-for-sale securities: | ||||
Tax provision on net unrealized (losses) gains arising during the period | $ 0 | $ (2) | $ (1) | $ (1) |
Tax provision (benefit) on (gains) losses reclassified into earnings | 0 | 1 | 0 | (2) |
Taxes effect on change in unrealized gains on available-for-sales securities | 0 | (1) | (1) | (3) |
Taxes on change in net unrealized losses on cash flow hedges: | ||||
Tax benefit (provision) on net unrealized gains (losses) arising during the period | 4 | 46 | (27) | 31 |
Tax provision on net gains reclassified into earnings | 13 | 6 | 45 | 25 |
Taxes effect on change in unrealized losses on cash flow hedges | 17 | 52 | 18 | 56 |
Taxes on change in unrealized components of defined benefit plans: | ||||
Tax provision on gains (losses) arising during the period | (1) | 0 | (25) | 0 |
Tax benefit on amortization of actuarial loss and prior service benefit | (5) | (5) | (11) | (10) |
Tax provision on curtailments, settlements and other | (7) | (11) | (14) | (12) |
Tax effect on change in unrealized components of defined benefit plans | (13) | (16) | (50) | (22) |
Tax benefit on change in cumulative translation adjustment | 0 | 42 | 1 | 22 |
Tax benefit (provision) on other comprehensive income | 4 | 77 | (32) | 53 |
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Comprehensive income | 1 | (75) | 476 | (152) |
Change in net unrealized (losses) gains on available-for-sale securities: | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Net unrealized (losses) gains arising during the period | (4) | 0 | (18) | 3 |
Reclassifications of losses (gains) into earnings | 0 | (4) | 0 | 2 |
Comprehensive income | (4) | (4) | (18) | 5 |
Change in net unrealized losses on cash flow hedges: | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Net unrealized (losses) gains arising during the period | 8 | (160) | 113 | (33) |
Reclassifications of losses (gains) into earnings | (201) | |||
Comprehensive income | (62) | (224) | (88) | (199) |
Change in net unrealized losses on cash flow hedges: | Reclassifications of gains (losses) into earnings | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Reclassifications of losses (gains) into earnings | (70) | (64) | (201) | (166) |
Unrealized components of defined benefit plans | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Net unrealized (losses) gains arising during the period | 465 | |||
Reclassifications of losses (gains) into earnings | 152 | |||
Comprehensive income | 78 | 54 | 617 | 102 |
Gains (losses) arising during the period | Reclassifications of gains (losses) into earnings | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Reclassifications of losses (gains) into earnings | 10 | (1) | 465 | (1) |
Amortization of actuarial loss and prior service benefit | Reclassifications of gains (losses) into earnings | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Reclassifications of losses (gains) into earnings | 72 | 65 | 163 | 132 |
Curtailments, settlements and other | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Comprehensive income | (4) | (10) | (11) | (29) |
Change in cumulative translation adjustment | ||||
Changes and reclassifications related to other comprehensive loss, net of taxes | ||||
Net unrealized (losses) gains arising during the period | (35) | |||
Reclassifications of losses (gains) into earnings | 0 | |||
Comprehensive income | $ (11) | $ 99 | $ (35) | $ (60) |
Stockholders' Equity - Componen
Stockholders' Equity - Components of AOCI (Details) - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | ||||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | May 24, 2016 | Oct. 13, 2015 | |
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | $ 31,518,000,000 | |||||
Balance at end of period | $ 29,047,000,000 | $ 29,047,000,000 | ||||
Share Repurchase program | ||||||
Stock Repurchase Program | ||||||
Stock repurchase program authorized amount | $ 3,000,000,000 | $ 3,000,000,000 | ||||
Common stock retired (in shares) | 2.1 | |||||
Repurchases of common stock recorded as a reduction to stockholders' equity | $ 39,000,000 | |||||
Share repurchase authorization remaining | 2,000,000,000 | $ 2,000,000,000 | ||||
ASR Agreement | ||||||
Stock Repurchase Program | ||||||
Common stock retired (in shares) | 59 | |||||
Repurchases of common stock recorded as a reduction to stockholders' equity | $ 1,300,000,000 | |||||
Change in net unrealized (losses) gains on available-for-sale securities: | ||||||
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | 54,000,000 | |||||
Transfer related to the Everett Transaction | (9,000,000) | |||||
Other comprehensive (loss) income before reclassifications | (4,000,000) | $ 0 | (18,000,000) | $ 3,000,000 | ||
Reclassifications of (gains) loss into earnings | 0 | (4,000,000) | 0 | 2,000,000 | ||
Balance at end of period | 27,000,000 | 27,000,000 | ||||
Change in net unrealized losses on cash flow hedges: | ||||||
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | 35,000,000 | |||||
Transfer related to the Everett Transaction | 0 | |||||
Other comprehensive (loss) income before reclassifications | 8,000,000 | $ (160,000,000) | 113,000,000 | $ (33,000,000) | ||
Reclassifications of (gains) loss into earnings | (201,000,000) | |||||
Balance at end of period | (53,000,000) | (53,000,000) | ||||
Unrealized components of defined benefit plans | ||||||
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | (5,642,000,000) | |||||
Transfer related to the Everett Transaction | 1,820,000,000 | |||||
Other comprehensive (loss) income before reclassifications | 465,000,000 | |||||
Reclassifications of (gains) loss into earnings | 152,000,000 | |||||
Balance at end of period | (3,205,000,000) | (3,205,000,000) | ||||
Change in cumulative translation adjustment | ||||||
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | (1,046,000,000) | |||||
Transfer related to the Everett Transaction | 768,000,000 | |||||
Other comprehensive (loss) income before reclassifications | (35,000,000) | |||||
Reclassifications of (gains) loss into earnings | 0 | |||||
Balance at end of period | (313,000,000) | (313,000,000) | ||||
Accumulated other comprehensive loss | ||||||
Components of accumulated other comprehensive loss, net of taxes | ||||||
Balance at beginning of period | (6,599,000,000) | |||||
Transfer related to the Everett Transaction | 2,579,000,000 | |||||
Other comprehensive (loss) income before reclassifications | 525,000,000 | |||||
Reclassifications of (gains) loss into earnings | (49,000,000) | |||||
Balance at end of period | $ (3,544,000,000) | $ (3,544,000,000) |
Net Earnings (Loss) Per Share83
Net Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Numerator: | ||||
(Loss) earnings from continuing operations | $ (487) | $ 322 | $ (232) | $ 684 |
(Loss) earnings from discontinued operations | (125) | (2) | (113) | (97) |
Net (loss) earnings | $ (612) | $ 320 | $ (345) | $ 587 |
Denominator: | ||||
Weighted-average shares used to compute basic net EPS (in shares) | 1,658 | 1,725 | 1,664 | 1,743 |
Dilutive effect of employee stock plans (in shares) | 0 | 26 | 0 | 22 |
Weighted-average shares used to compute diluted net EPS (in shares) | 1,658 | 1,751 | 1,664 | 1,765 |
Basic net (loss) earnings per share: | ||||
Basic - Continuing operations (in dollars per share) | $ (0.29) | $ 0.19 | $ (0.14) | $ 0.39 |
Basic - Discontinued operations (in dollars per share) | (0.08) | 0 | (0.07) | (0.06) |
Total basic net (loss) earnings per share (in dollars per share) | (0.37) | 0.19 | (0.21) | 0.33 |
Diluted - Continuing operations (in dollars per share) | (0.29) | 0.18 | (0.14) | 0.39 |
Diluted - Discontinued operations (in dollars per share) | (0.08) | 0 | (0.07) | (0.06) |
Total diluted net (loss) earnings per share (in dollars per share) | $ (0.37) | $ 0.18 | $ (0.21) | $ 0.33 |
Anti-dilutive weighted average stock awards (in shares) | 85 | 46 | 90 | 51 |
Litigation and Contingencies (D
Litigation and Contingencies (Detail) $ in Millions | Jun. 30, 2016USD ($) | Jan. 24, 2013USD ($) | Dec. 11, 2012USD ($) | Apr. 21, 2012USD ($) | May 10, 2010USD ($)employee | Apr. 29, 2010USD ($) | Apr. 30, 2014 | Apr. 30, 2017 | Oct. 31, 2007contract | 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 | employee | 7 | ||||||||||
Number of former HP India employees alleging underpaid customs | employee | 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 | contract | 3 | ||||||||||
ECT Proceedings | Minimum | |||||||||||
Litigation and Contingencies | |||||||||||
Length of sanctions | 2 years | ||||||||||
ECT Proceedings | Maximum | |||||||||||
Litigation and Contingencies | |||||||||||
Length of sanctions | 5 years | ||||||||||
Judicial Ruling | Oracle | |||||||||||
Litigation and Contingencies | |||||||||||
Amount awarded | $ 3,000 | ||||||||||
Judicial Ruling | Oracle - Past Lost Profits | |||||||||||
Litigation and Contingencies | |||||||||||
Amount awarded | 1,700 | ||||||||||
Judicial Ruling | Oracle - Future Lost Profits | |||||||||||
Litigation and Contingencies | |||||||||||
Amount awarded | $ 1,300 |
Guarantees, Indemnifications 85
Guarantees, Indemnifications and Warranties (Details) - USD ($) $ in Millions | 6 Months Ended | |
Apr. 30, 2017 | Oct. 31, 2016 | |
General Cross indemnifications | ||
Receivable | $ 1,300 | |
Changes in aggregated product warranty liabilities | ||
Balance at beginning of period | 497 | |
Accruals for warranties issued | 167 | |
Adjustments related to pre-existing warranties (including changes in estimates) | (6) | |
Settlements made (in cash or in kind) | (159) | |
Balance at end of period | 499 | |
Cross-Indemnifications | ||
General Cross indemnifications | ||
Receivable | 54 | |
Payable | 42 | |
Former Parent Company | Cross-Indemnifications | ||
General Cross indemnifications | ||
Receivable | $ 56 | |
Payable | $ 41 | |
Majority-Owned Subsidiary, Unconsolidated | ||
General Cross indemnifications | ||
Receivable | 108 | |
Tax Indemnification | Majority-Owned Subsidiary, Unconsolidated | ||
General Cross indemnifications | ||
Receivable | $ 127 |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Apr. 30, 2017 | Apr. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Oct. 31, 2016 | May 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Carrying value of investment in H3C | $ 2,620 | $ 2,620 | $ 2,648 | |||
Loss from equity interests | 3 | $ 0 | 25 | $ 0 | ||
H3C | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Carrying value of investment in H3C | $ 2,600 | $ 2,600 | $ 2,600 | |||
Ownership percentage | 49.00% | 49.00% | 49.00% | 49.00% | ||
Loss from equity interests | $ 3 | $ 25 | ||||
Amortization of basis difference | 38 | 73 | ||||
Allocated portion | 35 | 48 | ||||
H3C | Unisplendour | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage | 51.00% | |||||
H3C | Equity Method Investee | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Revenue | 253 | 513 | ||||
Purchases | 66 | 157 | ||||
Payable | $ 57 | $ 57 | $ 71 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 1 Months Ended |
May 31, 2017USD ($) | |
Subsequent Event | |
Subsequent Event [Line Items] | |
Sale Leaseback Transaction, Net Proceeds, Investing Activities | $ 104 |
Uncategorized Items - hpe-20170
Label | Element | Value |
Senior Notes [Member] | ||
Debt Instrument, Face Amount | us-gaap_DebtInstrumentFaceAmount | $ 1,500,000,000 |