HPE Next

3 Months Ended

Jan. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring

Summary of Restructuring Plans

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

Restructuring Activity

In connection with the 2015 and 2012 Plans, restructuring charges of $5 million were recorded by the Company for the three months ended January 31, 2018, based on restructuring activities impacting the Company's employees and infrastructure. For details on restructuring charges related to HPE Next, see Note 4, "HPE Next".

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



	2015 Plan						2012 Plan
	Employee Severance			Infrastructure and other			Employee Severance and EER			Infrastructure and other		Total
	In millions
Liability as of October 31, 2018	$	62		$	10		$	11		$	1	$	84
Cash payments	(9		)	(1		)	(2		)	—		(12		)
Liability as of January 31, 2019	$	53		$	9		$	9		$	1	$	72
Total costs incurred to date, as of January 31, 2019	$	751		$	78		$	1,268		$	145	$	2,242
Total costs expected to be incurred, as of January 31, 2019	$	751		$	78		$	1,268		$	145	$	2,242

The current restructuring liabilities related to the plans in the table above, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets at January 31, 2019 and October 31, 2018, were $46 million and $53 million, respectively. The non-current restructuring liabilities related to the plans in the table above, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets at January 31, 2019 and October 31, 2018, were $26 million and $31 million, respectively.

HPE Next

Transformation Costs

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

In association with the HPE Next initiative, during the three months ended January 31, 2019, the Company incurred $83 million of net charges, of which $78 million were recorded within Transformation costs, and $5 million were recorded within Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings. During the three months ended January 31, 2018, the Company incurred $245 million of net charges, which were recorded within Transformation costs.



	Three months ended January 31,
	2019		2018
	In millions
Program management⁽¹⁾	$	11	$	24
IT costs	27		33
Restructuring charges⁽²⁾	33		171
Gain on real estate sales	—		(1		)
Other⁽³⁾	12		18
Total	$	83	$	245


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


(2)	For the three months ended January 31, 2019, $5 million of these costs were recorded in Non-service net periodic benefit credit in the Condensed Consolidated Statement of Earnings.


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

Restructuring Plan

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



	Employee Severance			Infrastructure and other
	In millions
Liability as of October 31, 2018	$	291		$	33
Charges	28			5
Cash payments	(91		)	(7		)
Non-cash items	(4		)	(2		)
Liability as of January 31, 2019	$	224		$	29
Total costs incurred to date, as of January 31, 2019	$	794		$	66
Total costs expected to be incurred, as of January 31, 2019	$	1,200		$	180

As of January 31, 2019 and October 31, 2018, the current restructuring liability related to the HPE Next Plan, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets, was $193 million and $241 million, respectively. The non-current restructuring liability related to the HPE Next Plan, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of January 31, 2019 and October 31, 2018 was $60 million and $83 million, respectively.