(Mark One) | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: | |
Or |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from to |
Commission file number |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
(Address of principal executive offices) | (Zip code) | |||
(Registrant's telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Exchange Act: | ||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | Non-accelerated filer (Do not check if a smaller reporting company) | ☐ | Smaller reporting company | |||||
Emerging growth company |
Page | |||
Page | |
Three Months Ended January 31, | |||||||
2020 | 2019 | ||||||
In millions, except per share amounts | |||||||
Net revenue: | |||||||
Products | $ | $ | |||||
Services | |||||||
Financing income | |||||||
Total net revenue | |||||||
Costs and expenses: | |||||||
Cost of products | |||||||
Cost of services | |||||||
Financing interest | |||||||
Research and development | |||||||
Selling, general and administrative | |||||||
Amortization of intangible assets | |||||||
Transformation costs | |||||||
Acquisition, disposition and other related charges | |||||||
Total costs and expenses | |||||||
Earnings from operations | |||||||
Interest and other, net | ( | ) | ( | ) | |||
Tax indemnification adjustments | ( | ) | |||||
Non-service net periodic benefit credit | |||||||
Earnings from equity interests | |||||||
Earnings before taxes | |||||||
Provision for taxes | ( | ) | ( | ) | |||
Net earnings | $ | $ | |||||
Net earnings per share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Weighted-average shares used to compute net earnings per share: | |||||||
Basic | |||||||
Diluted |
Three Months Ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Net earnings | $ | $ | |||||
Other comprehensive income (loss) before taxes: | |||||||
Change in net unrealized (losses) gains on available-for-sale securities: | |||||||
Net unrealized gains (losses) arising during the period | |||||||
(Gains) losses reclassified into earnings | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Change in net unrealized gains (losses) on cash flow hedges: | |||||||
Net unrealized gains (losses) arising during the period | |||||||
Net (gains) losses reclassified into earnings | ( | ) | ( | ) | |||
( | ) | ||||||
Change in unrealized components of defined benefit plans: | |||||||
Net unrealized gains (losses) arising during the period | ( | ) | |||||
Amortization of net actuarial loss and prior service benefit | |||||||
Curtailments, settlements and other | |||||||
Change in cumulative translation adjustment | ( | ) | |||||
Other comprehensive income (loss) before taxes | ( | ) | |||||
(Provision) benefit for taxes | ( | ) | |||||
Other comprehensive income (loss), net of taxes | ( | ) | |||||
Comprehensive income | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
(Unaudited) | (Audited) | ||||||
In millions, except par value | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net of allowance for doubtful accounts | |||||||
Financing receivables, net of allowance for doubtful accounts | |||||||
Inventory | |||||||
Assets held for sale | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property, plant and equipment | |||||||
Long-term financing receivables and other assets | |||||||
Investments in equity interests | |||||||
Goodwill | |||||||
Intangible assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Notes payable and short-term borrowings | $ | $ | |||||
Accounts payable | |||||||
Employee compensation and benefits | |||||||
Taxes on earnings | |||||||
Deferred revenue | |||||||
Accrued restructuring | |||||||
Other accrued liabilities | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Other non-current liabilities | |||||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
HPE stockholders' equity: | |||||||
Preferred stock, $0.01 par value (300 shares authorized; none issued) | |||||||
Common stock, $0.01 par value (9,600 shares authorized; 1,293 and 1,294 shares issued and outstanding at January 31, 2020 and October 31, 2019, respectively) | |||||||
Additional paid-in capital | |||||||
Accumulated deficit | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total HPE stockholders' equity | |||||||
Non-controlling interests | |||||||
Total stockholders' equity | |||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | $ | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Stock-based compensation expense | |||||||
Provision for inventory and doubtful accounts | |||||||
Restructuring charges | |||||||
Deferred taxes on earnings | ( | ) | |||||
Earnings from equity interests | ( | ) | ( | ) | |||
Other, net | ( | ) | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | |||||||
Financing receivables | ( | ) | ( | ) | |||
Inventory | ( | ) | |||||
Accounts payable | ( | ) | ( | ) | |||
Taxes on earnings | ( | ) | ( | ) | |||
Restructuring | ( | ) | ( | ) | |||
Other assets and liabilities | ( | ) | ( | ) | |||
Net cash (used in) provided by operating activities | ( | ) | |||||
Cash flows from investing activities: | |||||||
Investment in property, plant and equipment | ( | ) | ( | ) | |||
Proceeds from sale of property, plant and equipment | |||||||
Purchases of available-for-sale securities and other investments | ( | ) | ( | ) | |||
Maturities and sales of available-for-sale securities and other investments | |||||||
Financial collateral posted | ( | ) | ( | ) | |||
Financial collateral received | |||||||
Payments made in connection with business acquisitions, net of cash acquired | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Short-term borrowings with original maturities less than 90 days, net | ( | ) | |||||
Proceeds from debt, net of issuance costs | |||||||
Payment of debt | ( | ) | ( | ) | |||
Proceeds related to stock-based award activities, net | ( | ) | ( | ) | |||
Repurchase of common stock | ( | ) | ( | ) | |||
Contributions from non-controlling interests | |||||||
Cash dividends paid | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ |
Common Stock | ||||||||||||||||||||||||||||||
Three Months Ended January 31, 2020 | Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | ||||||||||||||||||||||
In millions, except number of shares in thousands | ||||||||||||||||||||||||||||||
Balance at October 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net earnings | ||||||||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Cash dividends declared ($0.12 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Effects of adoption of accounting standard update(1) | ( | ) | ||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||
Balance at January 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Common Stock | ||||||||||||||||||||||||||||||
Three Months Ended January 31, 2019 | Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | ||||||||||||||||||||||
In millions, except number of shares in thousands | ||||||||||||||||||||||||||||||
Balance at October 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Net earnings | ||||||||||||||||||||||||||||||
Other comprehensive income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Cash dividends declared ($0.1125 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Effects of adoption of accounting standard updates(1) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||
Balance at January 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Compute | HPC & MCS | Storage | A & PS | Intelligent Edge | Financial Services | Corporate Investments | Total | ||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||
Three months ended January 31, 2020 | |||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Intersegment net revenue | |||||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Three months ended January 31, 2019 | |||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Intersegment net revenue | ( | ) | |||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Three Months Ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Net Revenue: | |||||||
Total segments | $ | $ | |||||
Eliminations of intersegment net revenue | ( | ) | ( | ) | |||
Total Hewlett Packard Enterprise condensed consolidated net revenue | $ | $ | |||||
Earnings before taxes: | |||||||
Total segment earnings from operations | $ | $ | |||||
Unallocated corporate costs and eliminations | ( | ) | ( | ) | |||
Unallocated stock-based compensation expense | ( | ) | ( | ) | |||
Amortization of initial direct costs | ( | ) | |||||
Amortization of intangible assets | ( | ) | ( | ) | |||
Transformation costs | ( | ) | ( | ) | |||
Acquisition, disposition and other related charges(1) | ( | ) | ( | ) | |||
Interest and other, net | ( | ) | ( | ) | |||
Tax indemnification adjustments | ( | ) | |||||
Non-service net periodic benefit credit | |||||||
Earnings from equity interests | |||||||
Total Hewlett Packard Enterprise consolidated earnings before taxes | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Compute | $ | $ | |||||
HPC & MCS | |||||||
Storage | |||||||
A & PS | |||||||
Intelligent Edge | |||||||
Financial Services | |||||||
Corporate Investments | |||||||
Corporate and unallocated assets | |||||||
Total Hewlett Packard Enterprise consolidated assets | $ | $ |
Three Months Ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Americas: | |||||||
United States | $ | $ | |||||
Americas excluding U.S. | |||||||
Total Americas | |||||||
Europe, Middle East and Africa | |||||||
Asia Pacific and Japan | |||||||
Total Hewlett Packard Enterprise consolidated net revenue | $ | $ |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Program management(1) | $ | $ | |||||
IT costs | |||||||
Restructuring charges | |||||||
Gain on real estate sales | ( | ) | |||||
Other(2) | |||||||
Total | $ | $ |
(1) | Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative. |
(2) |
Employee Severance | Infrastructure and other | ||||||
In millions | |||||||
Liability as of October 31, 2019 | $ | $ | |||||
Charges | |||||||
Cash payments | ( | ) | ( | ) | |||
Non-cash items | ( | ) | |||||
Liability as of January 31, 2020 | $ | $ | |||||
Total costs incurred to date, as of January 31, 2020 | $ | $ | |||||
Total costs expected to be incurred, as of January 31, 2020 | $ | $ |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Service cost | $ | $ | |||||
Interest cost(1) | |||||||
Expected return on plan assets(1) | ( | ) | ( | ) | |||
Amortization and deferrals(1): | |||||||
Actuarial loss | |||||||
Prior service benefit | ( | ) | ( | ) | |||
Net periodic benefit credit | ( | ) | ( | ) | |||
Settlement loss(1) | |||||||
Net benefit (credit) cost | $ | ( | ) | $ |
(1) | These non-service components of net periodic benefit cost were included in Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings. |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Deferred tax assets | $ | $ | |||||
Deferred tax liabilities | ( | ) | ( | ) | |||
Deferred tax assets net of deferred tax liabilities | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash(1) | |||||||
Cash, cash equivalents and restricted cash | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Finished goods | $ | $ | |||||
Purchased parts and fabricated assemblies | |||||||
Total | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Land | $ | $ | |||||
Buildings and leasehold improvements | |||||||
Machinery and equipment, including equipment held for lease | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Total | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Current portion of long-term debt | $ | $ | |||||
FS commercial paper | |||||||
Notes payable to banks, lines of credit and other | |||||||
Total | $ | $ |
Three Months Ended January 31, 2020 | |||
In millions | |||
Balance at beginning of period | $ | ||
Charges | |||
Settlements made | ( | ) | |
Balance at end of period | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Accounts receivable, net | |||||||
Accounts receivable | $ | $ | |||||
Unbilled receivables | |||||||
Allowance for doubtful accounts | ( | ) | ( | ) | |||
Total | $ | $ |
Three months ended January 31, 2020 | |||
in millions | |||
Operating lease cost | $ | ||
Finance lease cost | |||
Sublease rental income | ( | ) | |
Total lease cost | $ |
Balance Sheet Classification | January 31, 2020 | ||||
In millions | |||||
Operating Leases | |||||
ROU Assets | Long-term financing receivables and other assets | $ | |||
Lease Liabilities: | |||||
Operating lease liabilities - current | Other accrued liabilities | $ | |||
Operating lease liabilities - non-current | Other non-current liabilities | ||||
Total operating lease liabilities | $ | ||||
Finance Leases | |||||
Finance lease ROU Assets: | Property, plant and equipment | ||||
Gross finance lease ROU assets | $ | ||||
Less: Accumulated depreciation | ( | ) | |||
Net finance lease ROU assets | $ | ||||
Lease Liabilities: | |||||
Finance lease liabilities - current | Notes payable and short-term borrowings | $ | |||
Finance lease liabilities - non-current | Long-term debt | ||||
Total finance lease liabilities | $ | ||||
Total ROU assets | $ | ||||
Total lease liabilities | $ |
Operating Leases | Finance Leases | ||||
Weighted-average remaining lease term (in years) | |||||
Weighted-average discount rate | % | % |
Cash Flow Statement Activity | Three months ended January 31, 2020 | ||||
In millions | |||||
Cash outflows from operating leases | Net cash used in operating activities | $ | |||
ROU assets obtained in exchange for new operating lease liabilities | Non-cash activities | $ |
As of January 31, 2020 | |||
Fiscal year | In millions | ||
Remainder of fiscal 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total future lease payments | $ | ||
Less: imputed interest | ( | ) | |
Total lease liability balance | $ |
As of January 31, 2020 | |||
Fiscal year | In millions | ||
Remainder of fiscal 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total future lease payments | $ | ||
Less: imputed interest | ( | ) | |
Total lease liability balance | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Minimum lease payments receivable | $ | $ | |||||
Unguaranteed residual value | |||||||
Unearned income | ( | ) | ( | ) | |||
Financing receivables, gross | |||||||
Allowance for doubtful accounts | ( | ) | ( | ) | |||
Financing receivables, net | |||||||
Less: current portion(1) | ( | ) | ( | ) | |||
Amounts due after one year, net(1) | $ | $ |
(1) | The Company includes the current portion in Financing receivables, net of allowance for doubtful accounts, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets. |
Fiscal year | In millions | ||
Remainder of fiscal 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total undiscounted cash flows | $ | ||
Present value of lease payments (recognized as finance receivables) | $ | ||
Difference between undiscounted cash flows and discounted cash flows | $ |
Fiscal year | In millions | ||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Risk Rating: | |||||||
Low | $ | $ | |||||
Moderate | |||||||
High | |||||||
Total | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Balance at beginning of period | $ | $ | |||||
Provision for doubtful accounts | |||||||
Write-offs | ( | ) | ( | ) | |||
Balance at end of period | $ | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Gross financing receivables collectively evaluated for loss | $ | $ | |||||
Gross financing receivables individually evaluated for loss(1) | |||||||
Total | $ | $ | |||||
Allowance for financing receivables collectively evaluated for loss | $ | $ | |||||
Allowance for financing receivables individually evaluated for loss | |||||||
Total | $ | $ |
(1) | Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables. |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Billed:(1) | |||||||
Current 1-30 days | $ | $ | |||||
Past due 31-60 days | |||||||
Past due 61-90 days | |||||||
Past due > 90 days | |||||||
Unbilled sales-type and direct-financing lease receivables | |||||||
Total gross financing receivables | $ | $ | |||||
Gross financing receivables on non-accrual status(2) | $ | $ | |||||
Gross financing receivables 90 days past due and still accruing interest(2) | $ | $ |
(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. |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
In millions | |||||||
Equipment leased to customers | $ | $ | |||||
Accumulated depreciation | ( | ) | ( | ) | |||
Total | $ | $ |
Fiscal year | In millions | ||
Remainder of fiscal 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
In millions | |||
Sales-type leases and direct financing leases: | |||
Interest income | $ | ||
Lease income - operating leases | |||
Total lease income | $ |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
Assets held by VIE | In millions | ||||||
Other current assets | $ | $ | |||||
Financing receivables | |||||||
Short-term | $ | $ | |||||
Long-term | $ | $ | |||||
Property, plant and equipment | $ | $ | |||||
Liabilities held by VIE | |||||||
Notes payable and short-term borrowings, net of unamortized debt issuance costs | $ | $ | |||||
Long-term debt, net of unamortized debt issuance costs | $ | $ |
Compute | HPC & MCS | Storage | Intelligent Edge | Financial Services | Total | ||||||||||||||||||
In millions | |||||||||||||||||||||||
Balance at October 31, 2019(1) (2) | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Goodwill adjustments | ( | ) | ( | ) | |||||||||||||||||||
Balance at January 31, 2020(2) | $ | $ | $ | $ | $ | $ |
(1) | As a result of the organizational realignments which were effective as of November 1, 2019, (described in Note 1, "Overview and Summary of Significant Accounting Policies"), goodwill was reallocated to the respective segments as of the beginning of the period using a relative fair value approach. |
(2) | Goodwill is net of an accumulated impairment loss of $ |
As of January 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Money market funds | |||||||||||||||||||||||||||||||
Foreign bonds | |||||||||||||||||||||||||||||||
Other debt securities | |||||||||||||||||||||||||||||||
Derivative Instruments: | |||||||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||||||
Foreign exchange contracts | |||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Derivative Instruments: | |||||||||||||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Foreign exchange contracts | |||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
As of January 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||
Cost | Gross Unrealized Gain | Fair Value | Cost | Gross Unrealized Gain | Fair Value | ||||||||||||||||||
In millions | |||||||||||||||||||||||
Cash Equivalents: | |||||||||||||||||||||||
Time deposits | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||
Money market funds | — | — | |||||||||||||||||||||
Total cash equivalents | — | — | |||||||||||||||||||||
Available-for-Sale Investments: | |||||||||||||||||||||||
Foreign bonds | |||||||||||||||||||||||
Other debt securities | |||||||||||||||||||||||
Total available-for-sale investments | |||||||||||||||||||||||
Total cash equivalents and available-for-sale debt investments | $ | $ | $ | $ | $ | $ |
January 31, 2020 | |||||||
Amortized Cost | Fair Value | ||||||
In millions | |||||||
Due in one to five years | $ | $ | |||||
Due in more than five years | |||||||
$ | $ |
As of January 31, 2020 | As of October 31, 2019 | ||||||||||||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||||||||||||||
Net investment hedges: | |||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||
Total derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | |||||||||||||||||||||||||||||||||||||||
Other derivatives | |||||||||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||
Total derivatives | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
As of January 31, 2020 | ||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | (1) | $ | |||||||||||||||||
Derivative liabilities | $ | $ | $ | $ | $ | (2) | $ |
As of October 31, 2019 | ||||||||||||||||||||||||
In the Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||
(i) | (ii) | (iii) = (i)–(ii) | (iv) | (v) | (vi) = (iii)–(iv)–(v) | |||||||||||||||||||
Gross Amounts Not Offset | ||||||||||||||||||||||||
Gross Amount Recognized | Gross Amount Offset | Net Amount Presented | Derivatives | Financial Collateral | Net Amount | |||||||||||||||||||
In millions | ||||||||||||||||||||||||
Derivative assets | $ | $ | $ | $ | $ | (1) | $ | |||||||||||||||||
Derivative liabilities | $ | $ | $ | $ | $ | (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 or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of January 31, 2020, $ |
Carrying amount of the hedged assets/ (liabilities) | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities) | ||||||||||||||
As of | As of | ||||||||||||||
January 31, 2020 | October 31, 2019 | January 31, 2020 | October 31, 2019 | ||||||||||||
In millions | In millions | ||||||||||||||
Notes payable and short-term borrowings | $ | ( | ) | $ | ( | ) | $ | $ | |||||||
Long-term debt | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Gains (Losses) Recognized in OCI on Derivatives | |||||||
Three months ended January 31, 2020 | Three months ended January 31, 2019 | ||||||
In millions | |||||||
Derivatives in Cash Flow Hedging relationship | |||||||
Foreign exchange contracts | $ | $ | |||||
Interest rate contracts | ( | ) | |||||
Derivatives in Net Investment Hedging relationship | |||||||
Foreign exchange contracts | ( | ) | |||||
Total | $ | $ | ( | ) |
Gains (Losses) Recognized in Income | |||||||||||||||
Three months ended January 31, 2020 | Three months ended January 31, 2019 | ||||||||||||||
Net revenue | Interest and other, net | Net revenue | Interest and other, net | ||||||||||||
In millions | |||||||||||||||
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Gains (losses) on derivatives in fair value hedging relationships | |||||||||||||||
Interest rate contracts | |||||||||||||||
Hedged items | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Derivatives designated as hedging instruments | |||||||||||||||
Gains (losses) on derivatives in cash flow hedging relationships | |||||||||||||||
Foreign exchange contracts | |||||||||||||||
Amount of gains (losses) reclassified from accumulated other comprehensive income into income | |||||||||||||||
Gains (losses) on derivatives not designated as hedging instruments | |||||||||||||||
Foreign exchange contracts | ( | ) | ( | ) | |||||||||||
Other derivatives | ( | ) | |||||||||||||
Total gains (losses) | $ | $ | ( | ) | $ | $ | ( | ) |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Taxes on change in net unrealized gains (losses) on cash flow hedges: | |||||||
Tax (provision) benefit on net unrealized gains (losses) arising during the period | $ | ( | ) | $ | ( | ) | |
Tax provision (benefit) on net (gains) losses reclassified into earnings | |||||||
( | ) | ||||||
Taxes on change in unrealized components of defined benefit plans: | |||||||
Tax benefit (provision) on net unrealized gains (losses) arising during the period | |||||||
Tax (provision) benefit on amortization of net actuarial loss and prior service benefit | ( | ) | ( | ) | |||
Tax (provision) benefit on curtailments, settlements and other | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Tax benefit (provision) on change in cumulative translation adjustment | ( | ) | |||||
Tax (provision) benefit on other comprehensive income (loss) | $ | ( | ) | $ |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Other comprehensive income (loss), net of taxes: | |||||||
Change in net unrealized (losses) gains on available-for-sale securities: | |||||||
Net unrealized gains (losses) arising during the period | $ | $ | |||||
(Gains) losses reclassified into earnings | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Change in net unrealized gains (losses) on cash flow hedges: | |||||||
Net unrealized gains (losses) arising during the period | |||||||
Net (gains) losses reclassified into earnings | ( | ) | ( | ) | |||
( | ) | ||||||
Change in unrealized components of defined benefit plans: | |||||||
Net unrealized gains (losses) arising during the period | ( | ) | |||||
Amortization of net actuarial loss and prior service benefit | |||||||
Curtailments, settlements and other | ( | ) | ( | ) | |||
Change in cumulative translation adjustment | ( | ) | |||||
Other comprehensive income (loss), net of taxes | $ | $ | ( | ) |
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 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
Effect of change in accounting principle (1) | ( | ) | ( | ) | ( | ) | |||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | |||||||||||||||||
Reclassifications of (gains) losses into earnings | ( | ) | ( | ) | ( | ) | |||||||||||||
Balance at end of period | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions, except per share amounts | |||||||
Numerator: | |||||||
Net earnings | $ | $ | |||||
Denominator: | |||||||
Weighted-average shares used to compute basic net EPS | |||||||
Dilutive effect of employee stock plans | |||||||
Weighted-average shares used to compute diluted net EPS | |||||||
Net earnings per share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Anti-dilutive weighted-average stock awards(1) |
(1) | The Company excludes shares potentially issuable under employee stock plans that could dilute basic net EPS in the future from the calculation of diluted net earnings per share, as their effect, if included, would have been anti-dilutive for the periods presented. |
• | Overview. A discussion of our business and overall analysis of financial and other highlights, including non-GAAP financial measures, affecting the Company to provide context for the remainder of MD&A. The overview analysis compares the three months ended January 31, 2020 to the prior-year period. |
• | Critical Accounting Policies and Estimates. A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. |
• | Results of Operations. An analysis of our financial results comparing the three months ended January 31, 2020 to the prior-year period. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations at the segment level. |
• | Liquidity and Capital Resources. An analysis of changes in our cash flows and a discussion of our financial condition and liquidity. |
• | Contractual and Other Obligations. An overview of contractual obligations, retirement and post-retirement benefit plan funding, restructuring plans, uncertain tax positions, cross-indemnifications with HP Inc. (formerly known as "Hewlett-Packard Company"), DXC Technology Company ("DXC"), and Micro Focus International plc ("Micro Focus") and off-balance sheet arrangements. |
HPE Consolidated | Compute | HPC & MCS | Storage | A & PS | Intelligent Edge | Financial Services | Corporate Investments | ||||||||||||||||||||||||
Dollars in millions, except for per share amounts | |||||||||||||||||||||||||||||||
Net revenue(1) | $ | 6,949 | $ | 3,011 | $ | 823 | $ | 1,250 | $ | 243 | $ | 720 | $ | 859 | $ | 121 | |||||||||||||||
Year-over-year change % | (8.0 | )% | (15.8 | )% | 5.6 | % | (7.8 | )% | 0.8 | % | 2.1 | % | (6.5 | )% | 2.5 | % | |||||||||||||||
Earnings (loss) from operations(2) | $ | 348 | $ | 286 | $ | 49 | $ | 226 | $ | (2 | ) | $ | 70 | $ | 73 | $ | (27 | ) | |||||||||||||
Earnings (loss) from operations as a % of net revenue | 5.0 | % | 9.5 | % | 6.0 | % | 18.1 | % | (0.8 | )% | 9.7 | % | 8.5 | % | (22.3 | )% | |||||||||||||||
Year-over-year change percentage points | (1.0) pts | — | (6.6) pts | (0.6) pts | 12.5 pts | 6.3 pts | 0.1 pts | 1.4 pts | |||||||||||||||||||||||
Net earnings | $ | 333 | |||||||||||||||||||||||||||||
Diluted net earnings per share | $ | 0.25 | |||||||||||||||||||||||||||||
Supplemental Non-GAAP information: | |||||||||||||||||||||||||||||||
Non-GAAP earnings from operations | $ | 602 | |||||||||||||||||||||||||||||
Non-GAAP earnings from operations as a % of net revenue | 8.7 | % | |||||||||||||||||||||||||||||
Non-GAAP net earnings | $ | 575 | |||||||||||||||||||||||||||||
Non-GAAP diluted net earnings per share | $ | 0.44 |
(1) | HPE consolidated net revenue excludes intersegment net revenue. |
(2) | Segment earnings from operations exclude certain unallocated corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of intangible assets, amortization of initial direct costs, transformation costs, and acquisition, disposition and other related charges. |
Three months ended January 31, 2020 | Diluted net earnings per share | ||||||
In millions | |||||||
GAAP net earnings | $ | 333 | $ | 0.25 | |||
Non-GAAP adjustments: | |||||||
Amortization of initial direct costs | 3 | — | |||||
Amortization of intangible assets | 120 | 0.09 | |||||
Transformation costs | 89 | 0.07 | |||||
Acquisition, disposition and other related charges(1) | 42 | 0.03 | |||||
Tax indemnification adjustments | 21 | 0.02 | |||||
Non-service net periodic benefit credit | (37 | ) | (0.03 | ) | |||
Earnings from equity interests | 37 | 0.03 | |||||
Adjustments for taxes | (33 | ) | (0.02 | ) | |||
Non-GAAP net earnings | $ | 575 | $ | 0.44 | |||
GAAP earnings from operations | $ | 348 | |||||
Non-GAAP adjustments related to operations: | |||||||
Amortization of initial direct costs | 3 | ||||||
Amortization of intangible assets | 120 | ||||||
Transformation costs | 89 | ||||||
Acquisition and other related charges | 42 | ||||||
Non-GAAP earnings from operations | $ | 602 | |||||
GAAP earnings from operations as a % of net revenue | 5.0 | % | |||||
Non-GAAP earnings from operations as a % of net revenue | 8.7 | % |
Three months ended January 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Dollars | % of Revenue | Dollars | % of Revenue | ||||||||||
Dollars in millions | |||||||||||||
Net revenue | $ | 6,949 | 100.0 | % | $ | 7,553 | 100.0 | % | |||||
Cost of sales | 4,667 | 67.2 | 5,207 | 68.9 | |||||||||
Gross profit | 2,282 | 32.8 | 2,346 | 31.1 | |||||||||
Research and development | 485 | 7.0 | 466 | 6.2 | |||||||||
Selling, general and administrative | 1,218 | 17.5 | 1,211 | 16.0 | |||||||||
Amortization of intangible assets | 120 | 1.7 | 72 | 1.0 | |||||||||
Transformation costs | 89 | 1.3 | 78 | 1.1 | |||||||||
Acquisition, disposition and other related charges | 22 | 0.3 | 63 | 0.8 | |||||||||
Earnings from operations | 348 | 5.0 | 456 | 6.0 | |||||||||
Interest and other, net | (19 | ) | (0.3 | ) | (51 | ) | (0.7 | ) | |||||
Tax indemnification adjustments | (21 | ) | (0.3 | ) | 219 | 3.0 | |||||||
Non-service net periodic benefit credit | 37 | 0.5 | 16 | 0.2 | |||||||||
Earnings from equity interests | 33 | 0.5 | 15 | 0.2 | |||||||||
Earnings before taxes | 378 | 5.4 | 655 | 8.7 | |||||||||
Provision for taxes | (45 | ) | (0.6 | ) | (478 | ) | (6.4 | ) | |||||
Net earnings | $ | 333 | 4.8 | % | $ | 177 | 2.3 | % |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Cost of sales | $ | 13 | $ | 12 | |||
Research and development | 27 | 21 | |||||
Selling, general and administrative | 53 | 42 | |||||
Transformation costs | — | 2 | |||||
Stock-based compensation expense | $ | 93 | $ | 77 |
Three months ended January 31, 2020 | ||
Percentage points | ||
Compute | (7.5 | ) |
Storage | (1.4 | ) |
Financial Services | (0.8 | ) |
A & PS | — | |
Intelligent Edge | 0.2 | |
HPC & MCS | 0.6 | |
Corporate Investments/Other (1) | 0.9 | |
Total HPE | (8.0 | ) |
• | Compute net revenue declined due to weak market demand resulting in lower unit shipments, commodity and North American manufacturing capacity constraints and lower average selling prices, and lower Tier-1 server sales; |
• | HPC & MCS net revenue increased due to revenue from Cray; |
• | Storage net revenue decreased due primarily to weak market demand and commodity constraints, including North American manufacturing capacity constraints; |
• | A & PS net revenue increased due primarily to strength in the Asia Pacific Japan region; |
• | Intelligent Edge net revenue increased due primarily to increased revenue from WLAN products and higher support revenue; and |
• | HPE Financial Services net revenue decreased due primarily to a decrease in rental revenue due to lower average operating leases and lower lease equipment buyout revenue. |
• | we created the Compute segment consisting of the general purpose server and workload optimized server portfolios that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit; |
• | we created the HPC & MCS segment consisting of the high performance compute, mission-critical systems and edge compute offerings that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit; |
• | we created the Storage segment consisting of the former Hybrid IT-Storage business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit and the hyperconverged infrastructure products that were previously a part of the Hybrid IT-Compute business unit; |
• | we created the A & PS segment consisting of the consultative-led services that were previously a part of the Hybrid IT-HPE Pointnext business unit; and |
• | we transferred the DC Networking operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit to the Intelligent Edge segment. |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 3,011 | $ | 3,575 | (15.8 | )% | ||||
Earnings from operations | $ | 286 | $ | 340 | (15.9 | )% | ||||
Earnings from operations as a % of net revenue | 9.5 | % | 9.5 | % |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 823 | $ | 779 | 5.6 | % | ||||
Earnings from operations | $ | 49 | $ | 98 | (50.0 | )% | ||||
Earnings from operations as a % of net revenue | 6.0 | % | 12.6 | % |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 1,250 | $ | 1,356 | (7.8 | )% | ||||
Earnings from operations | $ | 226 | $ | 254 | (11.0 | )% | ||||
Earnings from operations as a % of net revenue | 18.1 | % | 18.7 | % |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 243 | $ | 241 | 0.8 | % | ||||
Earnings from operations | $ | (2 | ) | $ | (32 | ) | (93.8 | )% | ||
Earnings from operations as a % of net revenue | (0.8 | )% | (13.3 | )% |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 720 | $ | 705 | 2.1 | % | ||||
Earnings from operations | $ | 70 | $ | 24 | 191.7 | % | ||||
Earnings from operations as a % of net revenue | 9.7 | % | 3.4 | % |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 859 | $ | 919 | (6.5 | )% | ||||
Earnings from operations | $ | 73 | $ | 77 | (5.2 | )% | ||||
Earnings from operations as a % of net revenue | 8.5 | % | 8.4 | % |
Three months ended January 31, | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Total financing volume | $ | 1,408 | $ | 1,389 |
As of | |||||||
January 31, 2020 | October 31, 2019 | ||||||
Dollars in millions | |||||||
Financing receivables, gross | $ | 8,736 | $ | 8,652 | |||
Net equipment under operating leases | 3,980 | 4,084 | |||||
Capitalized profit on intercompany equipment transactions(1) | 342 | 382 | |||||
Intercompany leases(1) | 106 | 100 | |||||
Gross portfolio assets | 13,164 | 13,218 | |||||
Allowance for doubtful accounts(2) | 133 | 131 | |||||
Operating lease equipment reserve | 58 | 60 | |||||
Total reserves | 191 | 191 | |||||
Net portfolio assets | $ | 12,973 | $ | 13,027 | |||
Reserve coverage | 1.5 | % | 1.4 | % | |||
Debt-to-equity ratio(3) | 7.0x | 7.0x |
(1) | Intercompany activity is eliminated in consolidation. |
(2) | Allowance for doubtful accounts for financing receivables includes both the short- and long-term portions. |
(3) | Debt benefiting FS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with FS and its subsidiaries. Debt benefiting FS totaled $11.7 billion and $11.4 billion at January 31, 2020 and October 31, 2019, respectively, and was determined by applying an assumed debt-to-equity ratio, which management believes to be comparable to that of other similar financing companies. FS equity at January 31, 2020 and October 31, 2019 was $1.7 billion and $1.6 billion, respectively. |
Three months ended January 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Dollars in millions | ||||||||||
Net revenue | $ | 121 | $ | 118 | 2.5 | % | ||||
Loss from operations | $ | (27 | ) | $ | (28 | ) | 3.6 | % | ||
Loss from operations as a % of net revenue | (22.3 | )% | (23.7 | )% |
Three months ended January 31, 2020 | |||||||
2020 | 2019 | ||||||
In millions | |||||||
Net cash (used in) provided by operating activities | $ | (79 | ) | $ | 382 | ||
Net cash used in investing activities | (64 | ) | (616 | ) | |||
Net cash used in financing activities | (385 | ) | (945 | ) | |||
Net decrease in cash, cash equivalents and restricted cash | $ | (528 | ) | $ | (1,179 | ) |
Three months ended January 31, | ||||||||
2020 | 2019 | Change | ||||||
Days of sales outstanding in accounts receivable ("DSO") | 37 | 38 | (1 | ) | ||||
Days of supply in inventory ("DOS") | 49 | 40 | 9 | |||||
Days of purchases outstanding in accounts payable ("DPO") | (103 | ) | (100 | ) | (3 | ) | ||
Cash conversion cycle | (17 | ) | (22 | ) | 5 |
As of January 31, 2020 | |||
In millions | |||
Commercial paper programs | $ | 4,304 | |
Uncommitted lines of credit | $ | 1,149 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs | |||||||||
In thousands, except per share amounts | |||||||||||||
Month 1 (November 2019) | 3,713 | $ | 16.92 | 3,713 | $ | 2,402,350 | |||||||
Month 2 (December 2019) | 4,238 | $ | 15.93 | 4,238 | $ | 2,334,844 | |||||||
Month 3 (January 2020) | 4,800 | $ | 15.35 | 4,800 | $ | 2,261,154 | |||||||
Total | 12,751 | $ | 16.00 | 12,751 |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit(s) | Filing Date | |||||
2.1 | 8-K | 001-37483 | 2.1 | November 5, 2015 | ||||||
2.2 | 8-K | 001-37483 | 2.2 | November 5, 2015 | ||||||
2.3 | 8-K | 001-37483 | 2.4 | November 5, 2015 | ||||||
2.4 | 8-K | 001-37483 | 2.5 | November 5, 2015 | ||||||
2.5 | 8-K | 001-37483 | 2.6 | November 5, 2015 | ||||||
2.6 | 8-K | 001-37483 | 2.7 | November 5, 2015 | ||||||
2.7 | 8-K | 001-37483 | 2.1 | May 26, 2016 | ||||||
2.8 | 8-K | 001-37483 | 2.2 | May 26, 2016 | ||||||
2.9 | 8-K | 001-37483 | 2.1 | September 7, 2016 | ||||||
2.10 | 8-K | 001-37483 | 2.2 | September 7, 2016 | ||||||
2.11 | 8-K | 001-37483 | 2.3 | September 7, 2016 | ||||||
2.12 | 8-K | 001-37483 | 2.1 | November 2, 2016 | ||||||
2.13 | 8-K | 001-37483 | 2.2 | November 2, 2016 | ||||||
2.14 | 8-K | 001-37483 | 99.1 | March 7, 2017 | ||||||
2.15 | 8-K | 001-37483 | 99.2 | March 7, 2017 |
2.16 | 8-K | 001-38033 | 2.1 | April 6, 2017 | ||||||
2.17 | 8-K | 001-38033 | 2.2 | April 6, 2017 | ||||||
2.18 | 8-K | 001-38033 | 2.3 | April 6, 2017 | ||||||
2.19 | 8-K | 001-38033 | 2.4 | April 6, 2017 | ||||||
2.20 | 8-K | 001-38033 | 2.5 | April 6, 2017 | ||||||
2.21 | 8-K | 001-38033 | 2.6 | April 6, 2017 | ||||||
2.22 | 8-K | 001-37483 | 2.1 | September 1, 2017 | ||||||
2.23 | 8-K | 001-37483 | 2.2 | September 1, 2017 | ||||||
2.24 | 8-K | 001-37483 | 2.3 | September 1, 2017 | ||||||
2.25 | 8-K | 001-37483 | 2.4 | September 1, 2017 | ||||||
2.26 | 8-K | 001-37483 | 2.1 | May 17, 2019 | ||||||
3.1 | 8-K | 001-37483 | 3.1 | November 5, 2015 | ||||||
3.2 | 8-K | 001-37483 | 3.2 | November 5, 2015 | ||||||
3.3 | 8-K | 001-37483 | 3.1 | March 20, 2017 | ||||||
3.4 | 8-K | 001-37483 | 3.2 | March 20, 2017 | ||||||
4.1 | 8-K | 001-37483 | 4.1 | October 13, 2015 | ||||||
4.2 | 8-K | 001-37483 | 4.4 | October 13, 2015 |
4.3 | 8-K | 001-37483 | 4.5 | October 13, 2015 | ||||||
4.4 | 8-K | 001-37483 | 4.6 | October 13, 2015 | ||||||
4.5 | 8-K | 001-37483 | 4.7 | October 13, 2015 | ||||||
4.6 | 8-K | 001-37483 | 4.8 | October 13, 2015 | ||||||
4.7 | 8-K | 001-37483 | 4.2 | September 19, 2018 | ||||||
4.8 | 8-K | 001-37483 | 4.3 | September 19, 2018 | ||||||
4.9 | 8-K | 001-37483 | 4.2 | September 13, 2019 | ||||||
4.10 | 8-K | 001-37483 | 4.3 | September 13, 2019 | ||||||
4.11 | 8-K | 001-37483 | 4.12 | October 13, 2015 | ||||||
4.12 | S-3ASR | 333-222102 | 4.5 | December 15, 2017 | ||||||
10.1 | 8-K | 001-37483 | 10.1 | January 30, 2017 | ||||||
10.2 | 10 | 001-37483 | 10.4 | September 28, 2015 | ||||||
10.3 | S-8 | 333-207679 | 4.3 | October 30, 2015 | ||||||
10.4 | S-8 | 333-207679 | 4.4 | October 30, 2015 | ||||||
10.5 | 8-K | 001-37483 | 10.4 | November 5, 2015 | ||||||
10.6 | 8-K | 001-37483 | 10.7 | November 5, 2015 |
10.7 | 8-K | 001-37483 | 10.8 | November 5, 2015 | ||||||
10.8 | 8-K | 001-37483 | 10.9 | November 5, 2015 | ||||||
10.9 | 8-K | 001-37483 | 10.10 | November 5, 2015 | ||||||
10.10 | 10-Q | 001-37483 | 10.14 | March 10, 2016 | ||||||
10.11 | 10-Q | 001-37483 | 10.15 | March 10, 2016 | ||||||
10.12 | 8-K | 001-37483 | 10.1 | May 26, 2016 | ||||||
10.13 | S-8 | 333-207679 | 4.3 | March 6, 2017 | ||||||
10.14 | S-8 | 001-37483 | 4.3 | April 18, 2017 | ||||||
10.15 | S-8 | 001-37483 | 4.4 | April 18, 2017 | ||||||
10.16 | S-8 | 001-37483 | 4.3 | April 24, 2017 | ||||||
10.17 | 10-Q | 000-51333 | 10.1 | January 29, 2016 | ||||||
10.18 | 10-K | 000-51333 | 10.48 | February 28, 2007 | ||||||
10.19 | 10-K | 000-51333 | 10.3 | September 10, 2012 | ||||||
10.20 | S-1 | 000-51333 | 10.10 | February 4, 2005 | ||||||
10.21 | S-8 | 333-221254 | 4.3 | October 31, 2017 | ||||||
10.22 | S-8 | 333-221254 | 4.4 | October 31, 2017 | ||||||
10.23 | S-8 | 333-226181 | 4.3 | July 16, 2018 | ||||||
10.24 | 10-Q | 001-37483 | 10.29 | September, 4, 2018 | ||||||
10.25 | 10-Q | 001-37483 | 10.30 | September, 4, 2018 | ||||||
10.26 | 10-Q | 001-37483 | 10.27 | December 12, 2018 | ||||||
10.27 | 10-Q | 001-37483 | 10.29 | December 12, 2018 | ||||||
10.28 | S-8 | 333-229449 | 4.3 | January 31, 2019 | ||||||
10.29 | 8-K | 001-37483 | 10.1 | August 20, 2019 | ||||||
10.30 | S-8 | 333-234033 | 4.3 | October 1, 2019 | ||||||
10.31 | 10-K | 001-37483 | 10.31 | December 13, 2019 | ||||||
10.32 |
31.1 | ||||||||||
31.2 | ||||||||||
32 | ||||||||||
101.INS | XBRL Instance Document‡ | |||||||||
101.SCH | XBRL Taxonomy Extension Schema Document‡ | |||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document‡ | |||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document‡ | |||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document‡ | |||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document‡ |
* | Indicates management contract or compensation plan, contract or arrangement |
‡ | Filed herewith |
† | Furnished herewith |
HEWLETT PACKARD ENTERPRISE COMPANY | ||
/s/ TAREK A. ROBBIATI | ||
Tarek A. Robbiati Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory) |
1) | Fuel, oil, lubricants and other additives |
2) | Travel expenses of the crew, including food, lodging and ground transportation. |
3) | Hangar and tie down costs away from the Aircraft’s base of operation. |
4) | Insurance obtained for the specific flight. |
5) | Landing fees, airport taxes and similar assessments. |
6) | Customs, foreign permit, and similar fees directly related to the flight. |
7) | In-flight food and beverages. |
8) | Passenger ground transportation. |
9) | Flight planning and weather contract services. |
10) | An additional charge equal to 100% of the expenses listed in (1) of this subsection. |
9. | Truth-in-Leasing. In accordance with FAR Section 91.23, the parties state as follows: |
a. | OPERATOR HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED WITHIN THE 12-MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT (OR SUCH SHORTER PERIOD TO THE EXTENT THE AIRCRAFT IS LESS THAN 12 MONTHS OLD), AND WILL CONTINUE TO BE MAINTAINED AND INSPECTED, IN ACCORDANCE WITH THE PROVISIONS OF FAR PARTS 91 AND 135, IF APPLICABLE, AND ALL APPLICABLE REQUIREMENTS FOR MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN COMPLIED WITH. |
b. | LESSEE AGREES, CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN LESSEE OPERATES THE AIRCRAFT UNDER THIS AGREEMENT, IT SHALL BE KNOWN AS, CONSIDERED, AND IN FACT WILL BE THE OPERATOR OF THE AIRCRAFT AS PROVIDED HEREIN. |
c. | AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARs CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE. LESSEE ACKNOWLEDGES SHE UNDERSTANDS AND AGREES TO ABIDE BY THESE REGULATIONS. |
d. | THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE ADMINISTRATOR OF THE FAA. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Hewlett Packard Enterprise Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ ANTONIO F. NERI | |
Antonio F. Neri President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Hewlett Packard Enterprise Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ TAREK A. ROBBIATI | |
Tarek A. Robbiati Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
By: | /s/ ANTONIO F. NERI | |
Antonio F. Neri President and Chief Executive Officer |
By: | /s/ TAREK A. ROBBIATI | |
Tarek A. Robbiati Executive Vice President and Chief Financial Officer |
Retirement Benefit Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Benefit Cost | The Company's net pension benefit cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings for the three months ended January 31, 2020 and 2019, was as follows:
(1) These non-service components of net periodic benefit cost were included in Non-service net periodic benefit credit in the Condensed Consolidated Statements of Earnings.
|
Litigation and Contingencies |
3 Months Ended |
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Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies Hewlett Packard Enterprise is involved in various lawsuits, claims, investigations and proceedings including those consisting of Intellectual Property ("IP"), commercial, securities, employment, employee benefits and environmental matters, which arise in the ordinary course of business. In addition, as part of the Separation and Distribution Agreement, Hewlett Packard Enterprise and HP Inc. (formerly known as "Hewlett-Packard Company") agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreement included provisions that allocate liability and financial responsibility for pending litigation involving the parties, as well as provide for cross-indemnification of the parties against liabilities to one party arising out of liabilities allocated to the other party. The Separation and Distribution Agreement also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. arising prior to the Separation. Hewlett Packard Enterprise records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. Hewlett Packard Enterprise reviews these matters at least quarterly and adjusts these liabilities to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter. Litigation is inherently unpredictable. However, Hewlett Packard Enterprise believes it has valid defenses with respect to legal matters pending against us. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies. Hewlett Packard Enterprise believes it has recorded adequate provisions for any such matters and, as of January 31, 2020, it was not reasonably possible that a material loss had been incurred in connection with such matters in excess of the amounts recognized in its financial statements. Litigation, Proceedings and Investigations Ross and Rogus v. Hewlett Packard Enterprise Company. On November 8, 2018, a putative class action complaint was filed in the Superior Court of California, County of Santa Clara alleging that HPE pays its California-based female employees “systemically lower compensation” than HPE pays male employees performing substantially similar work. The complaint alleges various California state law claims, including California’s Equal Pay Act, Fair Employment and Housing Act, and Unfair Competition Law, and seeks certification of a California-only class of female employees employed in certain “Covered Positions.” The complaint seeks damages, statutory and civil penalties, attorneys’ fees and costs. On April 2, 2019, HPE filed a demurrer to all causes of action and an alternative motion to strike portions of the complaint. On July 2, 2019, the court denied HPE’s demurrer as to the claims of the putative class and granted HPE’s demurrer as to the claims of the individual plaintiffs. India Directorate of Revenue Intelligence Proceedings. On April 30 and May 10, 2010, the India Directorate of Revenue Intelligence (the "DRI") issued show cause notices to Hewlett-Packard India Sales Private Ltd ("HP India"), a subsidiary of HP Inc., seven 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. The hearing was rescheduled for January 15, 2019 but was postponed and has not yet been rescheduled. ECT Proceedings. In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified a former subsidiary of HP Inc. in Brazil ("HP Brazil") that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly coordinated their bids and fixed results for three 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 2020 and any subsequent appeal on the merits to last several years. Forsyth, et al. vs. HP Inc. and Hewlett Packard Enterprise. This purported class and collective action was filed on August 18, 2016 and an amended complaint was filed on December 19, 2016 in the United States District Court for the Northern District of California, against HP Inc. and Hewlett Packard Enterprise alleging defendants violated the Federal Age Discrimination in Employment Act ("ADEA"), the California Fair Employment and Housing Act, California public policy and the California Business and Professions Code by terminating older workers and replacing them with younger workers. Plaintiffs seek to certify a nationwide collective action under the ADEA comprised of all individuals aged 40 and older who had their employment terminated by an HP entity pursuant to a work force reduction ("WFR") plan on or after December 9, 2014 for individuals terminated in deferral states and on or after April 8, 2015 in non-deferral states. Plaintiffs also seek to certify a Rule 23 class under California law comprised of all persons 40 years or older employed by defendants in the state of California and terminated pursuant to a WFR plan on or after August 18, 2012. On September 20, 2017, the court granted the defendants' motion to compel arbitration and administratively closed the case pending resolution of the arbitration proceedings. On November 30, 2017, three named plaintiffs filed a single arbitration demand. Thirteen additional plaintiffs later joined the arbitration. On December 22, 2017, defendants filed a motion to (1) stay the case pending arbitrations and (2) enjoin the demanded arbitration and require each plaintiff to file a separate arbitration demand. On February 6, 2018, the court granted the motion to stay and denied the motion to enjoin. The claims of these sixteen arbitration named plaintiffs have been resolved. Additional opt-in plaintiffs were added to the litigation and these claims also were resolved as part of the arbitration process. The stay of the Forsyth class action has been lifted and a Third Amended Complaint was filed on January 7, 2020. Defendants filed a motion to dismiss the Third Amended Complaint on February 6, 2020. The Court has set a hearing on the Defendants' motion to dismiss for May 14, 2020. Wall v. Hewlett Packard Enterprise Company and HP Inc. This certified California class action and Private Attorney General Act action was filed against Hewlett-Packard Company on January 17, 2012 and the fifth amended (and operative) complaint was filed against HP Inc. and Hewlett Packard Enterprise on June 28, 2016 in the Superior Court of California, County of Orange. The complaint alleges that the defendants paid earned incentive compensation late and failed to timely pay final wages in violation of the California Labor Code. On August 9, 2016, the court ordered the class certified without prejudice to a future motion to amend or modify the class certification order or to decertify. The scheduled January 22, 2018 trial date was vacated following the parties’ notification to the court that they had reached a preliminary agreement to resolve the dispute. The parties subsequently finalized and executed a settlement agreement and, on May 9, 2018, plaintiff filed a motion seeking preliminary approval of the settlement. On July 2, 2018, the court issued an order granting preliminary approval of the settlement. On December 21, 2018, the court issued an order granting final approval. A Qualified Settlement Fund has been fully funded. Upon confirmation that the settlement distributions have been made, the matter will be closed. Jackson, et al. v. HP Inc. and Hewlett Packard Enterprise. This putative nationwide class action was filed on July 24, 2017 in the United States District Court for the Northern District of California, San Jose Division. Plaintiffs purport to bring the lawsuit on behalf of themselves and other similarly situated African-Americans and individuals over the age of forty. Plaintiffs allege that defendants engaged in a pattern and practice of racial and age discrimination in lay-offs and promotions. Plaintiffs filed an amended complaint on September 29, 2017. Plaintiffs seek damages, attorneys’ fees and costs, and declaratory and injunctive relief. On January 12, 2018, defendants moved to transfer the matter to the federal district court in the Northern District of Georgia. Defendants also moved to dismiss the claims on various grounds and to strike certain aspects of the proposed class definition. On July 11, 2018, the court granted defendants' motion to dismiss this action for improper venue, and also partially dismissed and struck certain claims without prejudice to re-filing in the appropriate venue. On July 23, 2018, plaintiffs re-filed their lawsuit in the United States District Court for the Northern District of Georgia. On August 9, 2018, Plaintiffs filed a notice of appeal of the dismissal of the Northern District of California action with the Ninth Circuit Court of Appeals. On August 15, 2018, Plaintiffs filed a motion to stay their lawsuit in the Northern District of Georgia, which was granted by the court. Defendants have resolved the claims of the individual plaintiffs and the matters have been dismissed. Hewlett-Packard Company v. Oracle (Itanium). On June 15, 2011, HP Inc. filed suit against Oracle in the Superior Court of California, County of Santa Clara in connection with Oracle's March 2011 announcement that it was discontinuing software support for HP Inc.’s Itanium-based line of mission critical servers. HP Inc. asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. The matter eventually progressed to trial, which 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 California Court of Appeal rejected Oracle’s appeal. The matter was remanded to the trial court for Phase 2 of the trial, which began on May 23, 2016, and was submitted to the jury on June 29, 2016. On June 30, 2016, the jury returned a verdict in favor of HP Inc., awarding HP Inc. approximately $3 billion in damages: $1.7 billion for past lost profits and $1.3 billion for future lost profits. On October 20, 2016, the court entered judgment for this amount with interest accruing until the judgment is paid. Oracle’s motion for a new trial was denied on December 19, 2016, and Oracle filed its notice of appeal from the trial court’s judgment on January 17, 2017. On February 2, 2017, HP Inc. filed a notice of cross-appeal challenging the trial court’s denial of prejudgment interest. On May 16, 2019, HP Inc. filed its application to renew the judgment. As of May 16, 2019, the renewed judgment is approximately $3.8 billion. Daily interest on the renewed judgment is now accruing at $1 million and will be recorded upon receipt. The parties have completed appellate briefing in the California Court of Appeal and are awaiting the scheduling of oral argument. Pursuant to the terms of the Separation and Distribution Agreement, HP Inc. and Hewlett Packard Enterprise will share equally in any recovery from Oracle once Hewlett Packard Enterprise has been reimbursed for all costs incurred in the prosecution of the action prior to the HP Inc. /Hewlett Packard Enterprise separation on November 1, 2015. Oracle America, Inc., et al. v. Hewlett Packard Enterprise Company (Terix copyright matter). On March 22, 2016, Oracle filed a complaint against HPE in the United States District Court for the Northern District of California, alleging copyright infringement, interference with contract, intentional interference with prospective economic relations, and unfair competition. Oracle’s claims arise out of HPE’s prior use of a third-party maintenance provider named Terix Computer Company, Inc. (“Terix”). Oracle contends that in connection with HPE’s use of Terix as a subcontractor for certain customers of HPE’s multivendor support business, Oracle’s copyrights were infringed, and HPE is liable for vicarious and contributory infringement and related claims. The lawsuit against HPE follows a prior lawsuit brought by Oracle against Terix in 2013 relating to Terix’s alleged unauthorized provision of Solaris patches to customers on Oracle hardware. On June 14, 2018, the court heard oral argument on HPE's and Oracle's cross-motions for summary judgment. The court has not yet ruled on the parties' motions. On January 29, 2019, the court granted HPE’s Motion for Summary Judgment as to all of Oracle’s claims and vacated the trial date. On February 20, 2019, the court entered judgment in favor of HPE, dismissing Oracle’s claims in their entirety. Oracle has appealed the trial court’s ruling to the United States Court of Appeals for the Ninth Circuit. Oracle’s opening brief was filed on July 29, 2019. HPE’s responsive brief was filed on September 27, 2019. Oracle’s reply brief was filed November 18, 2019. Network-1 Technologies, Inc. v. Alcatel-Lucent USA Inc., et al. This patent infringement action was filed on September 15, 2011 in the United States District Court for the Eastern District of Texas, alleging that various Hewlett Packard Enterprise switches and access points infringe Network-1’s patent relating to the 802.3af and 802.3at “Power over Ethernet” standards. Network-1 seeks damages, attorneys’ fees and costs, and declaratory and injunctive relief. The Network-1 patent at issue expires in 2020. A jury trial was conducted beginning on November 6, 2017. On November 13, 2017, the jury returned a verdict in favor of HPE, finding that HPE did not infringe Network-1’s patent and that the patent was invalid. On August 29 2018, the court denied Network-1's motion for a new trial on infringement and entered the jury's verdict finding that HPE does not infringe the relevant Network-1 patent. The court also granted Network-1's motion for Judgment as a Matter of Law on validity. Network-1 has appealed the jury verdict of non-infringement to the United States Court of Appeals for the Federal Circuit. HPE has cross-appealed the court’s decision to grant Network-1's motion for Judgment as a Matter of Law on validity. Appellate briefing has been completed. The Federal Circuit Court of Appeal held oral argument on November 4, 2019. Shared Litigation with HP Inc., DXC and Micro Focus As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation. Environmental 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.
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Accounting for Leases as a Lessor - Summary of the Aging and Non-accrual Status of Gross Financing Receivables (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Billed: | ||
Current 1-30 days | $ 350 | $ 301 |
Past due 31-60 days | 53 | 62 |
Past due 61-90 days | 32 | 15 |
Past due 90 days | 111 | 88 |
Unbilled sales-type and direct-financing lease receivables | 8,190 | 8,186 |
Financing receivables, gross | 8,736 | 8,652 |
Gross financing receivables on non-accrual status | 322 | 276 |
Gross financing receivables 90 days past due and still accruing interest | $ 164 | $ 121 |
Accounting for Leases as a Lessor - Minimum Finance Lease Receivables (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
2020 | $ 3,939 | |
2021 | 2,449 | |
2022 | 1,555 | |
2023 | 752 | |
2024 | 306 | |
Thereafter | 69 | |
Total | $ 9,144 | $ 9,070 |
Accounting for Leases as a Lessee - Future Minimum Lease Commitments on Finance Leases (Details) $ in Millions |
Jan. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of 2020 | $ 5 |
2021 | 6 |
2022 | 6 |
2023 | 7 |
2024 | 7 |
Thereafter | 41 |
Total future lease payments | 72 |
Less: imputed interest | (12) |
Total lease liability balance | $ 60 |
HPE Next - Transformation Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Restructuring Cost and Reserve [Line Items] | ||
Total | $ 89 | $ 78 |
HPE Next | ||
Restructuring Cost and Reserve [Line Items] | ||
Program management | 11 | 11 |
IT costs | 28 | 27 |
Restructuring charges | 84 | 33 |
Gain on real estate sales | (34) | 0 |
Other | 0 | 12 |
Total | $ 89 | $ 83 |
Taxes on Earnings - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax assets | $ 1,529 | $ 1,515 |
Deferred tax liabilities | (311) | (311) |
Deferred tax assets net of deferred tax liabilities | $ 1,218 | $ 1,204 |
Financial Instruments - Pre-tax Effect of Derivative Instruments in Hedging Relationships on OCI (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | $ 75 | $ 34 |
Total | 96 | (9) |
Foreign currency contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | 76 | 34 |
Gains (Losses) Recognized in OCI on Derivatives in Net Investment Hedging Relationship | 21 | (43) |
Interest rate contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | $ (1) | $ 0 |
Accounting for Leases as a Lessor - Lessor Activity Included in Income Statement (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Financing income | $ 113 |
Lease income - operating leases | 625 |
Total lease income | $ 738 |
Fair Value - Narrative (Details) - USD ($) $ in Billions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Fair value, short-term and long-term debt | $ 14.8 | $ 14.6 |
Financial Instruments - Offsetting Assets and Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Oct. 31, 2019 |
|
Derivative assets | ||
Gross Amount Recognized | $ 496 | $ 468 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 496 | 468 |
Gross Amounts Not Offset | ||
Derivatives | 118 | 123 |
Financial Collateral | 349 | 263 |
Net Amount | 29 | 82 |
Derivative liabilities | ||
Gross Amount Recognized | 130 | 147 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 130 | 147 |
Gross Amounts Not Offset | ||
Derivatives | 118 | 123 |
Financial Collateral | 6 | 19 |
Net Amount | $ 6 | 5 |
Business days prior to reporting date | 2 days | |
Cash collateral | $ 6 | |
Counterparty collateral | $ 19 |
Accounting for Leases as a Lessee - Components of Lease Cost (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 58 |
Finance lease cost | 2 |
Sublease rental income | (16) |
Total lease cost | $ 44 |
Balance Sheet Details - Changes in Aggregate Product Warranty Liabilities (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2020
USD ($)
| |
Changes in aggregated product warranty liabilities | |
Balance at beginning of period | $ 400 |
Charges | 67 |
Settlements made | (77) |
Balance at end of period | $ 390 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Millions |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Equity Attributable to the Company |
Non-controlling Interests |
Total Equity |
||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at beginning of period (in shares) at Oct. 31, 2018 | 1,423,303 | |||||||||||
Balance at beginning of period at Oct. 31, 2018 | $ 14 | $ 30,342 | $ (5,899) | $ (3,218) | $ 21,239 | $ 35 | $ 21,274 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net earnings | 177 | 177 | 7 | 184 | ||||||||
Other comprehensive income | $ (76) | (76) | (76) | (76) | ||||||||
Comprehensive income | 101 | 7 | 108 | |||||||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 8,653 | |||||||||||
Issuance of common stock in connection with employee stock plans and other | (17) | (17) | (17) | |||||||||
Repurchases of common stock (in shares) | (53,851) | |||||||||||
Repurchases of common stock | (795) | (795) | (795) | |||||||||
Cash dividends declared | (150) | (150) | (150) | |||||||||
Effects of adoption of accounting standard updates | [1] | (2,162) | (2,162) | (2,162) | ||||||||
Stock-based compensation expense | 77 | 77 | 77 | |||||||||
Balance at beginning of period (in shares) at Jan. 31, 2019 | 1,378,105 | |||||||||||
Balance at end of period at Jan. 31, 2019 | $ 14 | 29,607 | (8,034) | (3,294) | 18,293 | 42 | 18,335 | |||||
Balance at beginning of period (in shares) at Oct. 31, 2019 | 1,294,000 | 1,294,369 | ||||||||||
Balance at beginning of period at Oct. 31, 2019 | $ 17,149 | $ 13 | 28,444 | (7,632) | (3,727) | 17,098 | 51 | 17,149 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net earnings | 333 | 333 | 2 | 335 | ||||||||
Other comprehensive income | $ 70 | 70 | 70 | 70 | ||||||||
Comprehensive income | 403 | 2 | 405 | |||||||||
Issuance of common stock in connection with employee stock plans and other (in shares) | 11,361 | |||||||||||
Issuance of common stock in connection with employee stock plans and other | (46) | 1 | (45) | 1 | (44) | |||||||
Repurchases of common stock (in shares) | (12,827) | |||||||||||
Repurchases of common stock | (204) | (204) | (204) | |||||||||
Cash dividends declared | (156) | (156) | (156) | |||||||||
Effects of adoption of accounting standard updates | [2] | 43 | (43) | 0 | 0 | |||||||
Stock-based compensation expense | 93 | 93 | 93 | |||||||||
Balance at beginning of period (in shares) at Jan. 31, 2020 | 1,293,000 | 1,292,903 | ||||||||||
Balance at end of period at Jan. 31, 2020 | $ 17,243 | $ 13 | $ 28,287 | $ (7,411) | $ (3,700) | $ 17,189 | $ 54 | $ 17,243 | ||||
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 333 | $ 177 |
Change in net unrealized (losses) gains on available-for-sale securities: | ||
Net unrealized gains (losses) arising during the period | 2 | 2 |
(Gains) losses reclassified into earnings | (3) | (3) |
Change in net unrealized gains (losses) on available-for-sale securities | (1) | (1) |
Change in net unrealized gains (losses) on cash flow hedges: | ||
Net unrealized gains (losses) arising during the period | 75 | 34 |
Net (gains) losses reclassified into earnings | (69) | (133) |
Change in net unrealized gains (losses) on cash flow hedges | 6 | (99) |
Change in unrealized components of defined benefit plans: | ||
Net unrealized gains (losses) arising during the period | 17 | (55) |
Amortization of net actuarial loss and prior service benefit | 61 | 52 |
Curtailments, settlements and other | 0 | 5 |
Change in unrealized components of defined benefit plans | 78 | 2 |
Change in cumulative translation adjustment | (4) | 12 |
Other comprehensive income (loss) before taxes | 79 | (86) |
(Provision) benefit for taxes | (9) | 10 |
Other comprehensive income (loss), net of taxes | 70 | (76) |
Comprehensive income | $ 403 | $ 101 |
Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents and Available-for-Sale Investments | Cash equivalents and available-for-sale investments were as follows:
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Contractual Maturities of Investments in Available-for-Sale Debt Securities | Contractual maturities of available-for-sale debt investments were as follows:
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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:
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Offsetting Assets | As of January 31, 2020 and October 31, 2019, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
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Offsetting Liabilities | As of January 31, 2020 and October 31, 2019, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
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Pre-tax Effect of Derivative Instruments and Related Hedged Items in a Fair Value Hedging Relationship | The amounts recorded on the Condensed Consolidated Balance Sheets relating to cumulative basis adjustments for fair value hedges were as follows;
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Pre-tax Effect of Derivative Instruments in Net Investment Hedging Relationships | The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") for the three months ended January 31, 2020 and January 31, 2019 was as follows:
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Pre-tax Effect of Derivative Instruments in Cash Flow Hedging Relationships | The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") for the three months ended January 31, 2020 and January 31, 2019 was as follows:
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Effect of Derivative Instruments on the Statement of Earnings | The pre-tax effect of derivative instruments on the Condensed Consolidated Statements of Earnings for the three months ended January 31, 2020 and January 31, 2019 was as follows:
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Segment Information - Narrative (Details) |
3 Months Ended |
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Jan. 31, 2020
segment
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Segment Reporting [Abstract] | |
Number of segments | 7 |
Fair Value |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
During the three months ended January 31, 2020, there were no transfers between levels within the fair value hierarchy. Other Fair Value Disclosures Short-Term and Long-Term Debt: At January 31, 2020 and October 31, 2019, the estimated fair value of the Company's short-term and long-term debt was $14.8 billion and $14.6 billion, respectively.
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Balance Sheet Details |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Details | Balance Sheet Details Balance sheet details were as follows: Cash, cash equivalents and restricted cash
(1) The Company includes Restricted cash in Other current assets in the accompanying Condensed Consolidated Balance Sheets. Inventory
Property, Plant and Equipment
Notes Payable and Short-Term Borrowings Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:
On February 20, 2020, the Company issued $755 million of asset-backed debt securities in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 1.87%, payable monthly from April 2020, $243 million of the asset-backed debt securities have a stated maturity date of March 9, 2021, followed by $512 million with a stated maturity date of February 20, 2030. Warranties The Company's aggregate product warranty liability as of January 31, 2020, and changes during the three months then ended were as follows:
Contract balances The Company’s contract balances consist of contract assets, contract liabilities, and costs to obtain a contract with a customer. Contract Assets A summary of accounts receivable, net, including unbilled receivables was as follows:
Contract Liabilities Contract liabilities consist of deferred revenue. The aggregate balance of current and non-current deferred revenue was $6.0 billion as of January 31, 2020 and October 31, 2019. During the three months ended January 31, 2020, approximately $1.3 billion of deferred revenue as of October 31, 2019 was recognized as revenue. Remaining Performance Obligations Revenue allocated to remaining performance obligations represents contract work that has not yet been performed and does not include contracts where the customer is not committed. Remaining performance obligations estimates are subject to change and are affected by several factors, including contract terminations, changes in the scope of contracts, adjustments for revenue that has not materialized and adjustments for currency. Remaining performance obligations consist of deferred revenue. As of January 31, 2020, the aggregate amount of remaining performance obligations was $6.0 billion. The Company expects to recognize approximately 42% of this amount as revenue over the remaining fiscal year. Costs to Obtain a Contract As of January 31, 2020, the current and non-current portions of the capitalized costs to obtain a contract were $51 million and $77 million, which were included in Other current assets and Long-term financing receivables and other assets, respectively, in the Condensed Consolidated Balance Sheet. For the three months ended January 31, 2020 and 2019, the Company amortized $14 million and $10 million, respectively, of capitalized costs to obtain a contract.
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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information As described in Note 1, "Overview and Summary of Significant Accounting Policies", effective at the beginning of the first quarter of fiscal 2020, the Company implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. Hewlett Packard Enterprise's operations are now organized into seven segments for financial reporting purposes: Compute, HPC & MCS, Storage, A & PS, Intelligent Edge, Financial Services ("FS"), and Corporate Investments. Hewlett Packard Enterprise's organizational structure is based on a number of factors that the Chief Operating Decision Maker ("CODM"), who is the Chief Executive Officer ("CEO"), uses to evaluate, view and run the Company's business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The seven 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. Compute. HPE's compute portfolio offers both general purpose servers for multi-workload computing and workload optimized servers. HPE's general purpose servers include HPE ProLiant, secure and versatile rack and tower servers; HPE BladeSystem, a modular infrastructure that converges server, storage and networking; and HPE Synergy, a composable infrastructure for traditional and cloud-native applications. The Company's workload optimized server portfolio includes HPE Cloudline for cloud data centers. Compute offerings also include operational services, transformation projects, professional services and support services. The Compute support team is also a provider of on-premises flexible consumption models, such as HPE GreenLake. High Performance Compute & Mission-Critical Systems. HPE's HPC & MCS portfolio offers workload-optimized servers designed to support specific use cases. The HPC portfolio includes the HPE Apollo and Cray products that are sold as supercomputing systems to support data-intensive workloads for high performance computing, data analytics and artificial intelligence applications. The MCS portfolio includes the HPE Superdome Flex, HPE Nonstop and HPE Integrity product lines for critical applications such as payments and transaction processing that require high availability, fault-tolerant computing infrastructure. The HPC & MCS segment also includes the Edge Compute business which consists of the HPE Moonshot and HPE Edgeline products for computing at the network edge. HPC & MCS offerings also include operational services, transformation projects, professional services and support services. HPC & MCS products can be purchased through on-premises flexible consumption models, such as HPE GreenLake. Storage. HPE provides workload optimized storage product and service offerings that are AI-driven and built for cloud environments with GreenLake as-a-service consumption and flexible investment options. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments. Key solutions include an intelligent hyperconverged infrastructure (“HCI”) portfolio with HPE Nimble Storage dHCI, a disaggregated HCI solution for the enterprise data center and HPE SimpliVity, a hyperconverged platform for virtualization. The portfolio also includes HPE Primera, HPE Nimble Storage and HPE 3PAR Storage for mission-critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers along with BlueData and MapR technology for expertise in artificial intelligence, machine learning and analytics data management. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE Modular Storage Arrays ("MSA") and HPE XP. Advisory and Professional Services provides consultative-led services, expertise and advice, implementation services as well as complex solution engagement capabilities. A & PS experts advise their customers through their digital transformation. A & PS is also a provider of on-premises flexible consumption models, such as HPE GreenLake, that enable IT agility, simplify operations, and align cost to value. Intelligent Edge is comprised of a portfolio of secure edge-to-cloud solutions operating under the Aruba brand that includes wired and wireless local area network "(LAN"), campus and data center switching, software-defined wide-area-networking, security, and associated services to enable secure connectivity for businesses of any size. The primary business drivers for Intelligent Edge solutions are mobility and the Internet of Things ("IoT"). The HPE Aruba product portfolio includes wired and wireless LAN hardware products such as Wi-Fi access points, switches, routers, sensors. The HPE Aruba software and services portfolio includes software products for cloud-based management, network management, network access control, analytics and assurance, location services software and professional and support services, as well as as-a Service ("aaS") and consumption models for the Intelligent Edge portfolio of products. Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption, and utility programs and asset management services, for customers that facilitate unique technology deployment models and the acquisition of complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. FS also supports financial solutions for on-premise flexible consumption models, such as HPE GreenLake. In order to provide flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment strategies. 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 which is responsible for research and development and also hosts certain business incubations projects, and the Communications and Media Solutions ("CMS") business. Segment Policy There have been no significant changes to the Company's segment accounting policies disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2019, except for the organizational changes described in Note 1, "Overview and Summary of Significant Accounting Policies". Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of initial direct costs, amortization of intangible assets, transformation costs, acquisition, disposition and other related charges. Segment Operating Results Segment net revenue and segment operating results was as follows:
The reconciliation of segment operating results to Hewlett Packard Enterprise condensed consolidated financial statements was as follows:
(1) Fiscal 2020 Acquisition, disposition and other related charges includes $20 million related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray Inc., which is included in Cost of products. Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated assets were as follows:
The Company’s net revenue by geographic regions was as follows:
|
Litigation and Contingencies (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 24 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 16, 2019
USD ($)
|
Feb. 06, 2018
plaintiff
|
Nov. 30, 2017
plaintiff
|
Dec. 19, 2016 |
Jun. 30, 2016
USD ($)
|
Jan. 24, 2013
USD ($)
|
Dec. 11, 2012
USD ($)
|
Apr. 21, 2012
USD ($)
|
May 10, 2010
USD ($)
employee
|
Apr. 29, 2010
USD ($)
|
Dec. 31, 2017
plaintiff
|
Jul. 31, 2011 |
Jan. 31, 2020 |
Oct. 31, 2008
contract
|
Apr. 20, 2012
USD ($)
|
Apr. 11, 2012
USD ($)
|
Jun. 15, 2011
phase
|
|
Litigation and Contingencies | |||||||||||||||||
Damages sought | $ 370 | ||||||||||||||||
Forsyth, et al. vs HP Inc. and Hewlett Packard Enterprise | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Number of plaintiffs | plaintiff | 16 | 3 | 13 | ||||||||||||||
Judicial ruling | Oracle | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Number of phases | phase | 2 | ||||||||||||||||
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 | ||||||||||||||||
Renewed judgement | Oracle | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Amount awarded | $ 3,800 | ||||||||||||||||
Daily interest accrual on renewed judgement | $ 1 | ||||||||||||||||
Minimum | Forsyth, et al. vs HP Inc. and Hewlett Packard Enterprise | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Age of terminated employees | 40 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 | ||||||||||||||||
Bid and contract term | 5 years | ||||||||||||||||
ECT proceedings | Maximum | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Length of sanctions | 5 years | ||||||||||||||||
ECT proceedings | Minimum | |||||||||||||||||
Litigation and Contingencies | |||||||||||||||||
Length of sanctions | 2 years |
Financial Instruments - Gross Notional and Fair Value of Instruments in the Balance Sheets (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Derivatives, Fair Value | ||
Outstanding Gross Notional | $ 24,308 | $ 24,189 |
Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 217 | 215 |
Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 279 | 253 |
Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 91 | 107 |
Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 39 | 40 |
Derivatives designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 17,541 | 17,694 |
Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 187 | 195 |
Derivatives designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 276 | 250 |
Derivatives designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 65 | 74 |
Derivatives designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 39 | 37 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 6,850 | 6,850 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 0 |
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 | 96 | 72 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 6 | 11 |
Derivatives designated as hedging instruments | Fair value hedges | Interest rate contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 0 |
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 500 | 500 |
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 0 |
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 1 |
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 0 |
Derivatives designated as hedging instruments | Cash flow hedges | Interest rate contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 0 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 8,401 | 8,578 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 148 | 164 |
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 | 136 | 141 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 42 | 45 |
Derivatives designated as hedging instruments | Cash flow hedges | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 29 | 27 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 1,790 | 1,766 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 39 | 31 |
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 | 44 | 36 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 17 | 18 |
Derivatives designated as hedging instruments | Net investment hedges | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 10 | 10 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 6,767 | 6,495 |
Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 30 | 20 |
Derivatives not designated as hedging instruments | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 3 | 3 |
Derivatives not designated as hedging instruments | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 26 | 33 |
Derivatives not designated as hedging instruments | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 3 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 6,653 | 6,398 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 29 | 17 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 3 | 3 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 25 | 33 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 3 |
Derivatives not designated as hedging instruments | Other derivatives | ||
Derivatives, Fair Value | ||
Outstanding Gross Notional | 114 | 97 |
Derivatives not designated as hedging instruments | Other derivatives | Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 1 | 3 |
Derivatives not designated as hedging instruments | Other derivatives | Long-Term Financing Receivables and Other Assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Other Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 1 | 0 |
Derivatives not designated as hedging instruments | Other derivatives | Long-Term Other Liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 0 | $ 0 |
Financial Instruments - Amounts Recorded in the Balance Sheet (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Notes payable and short-term borrowings | ||
Derivatives, Fair Value | ||
Carrying amount of the hedged assets/ (liabilities) | $ (2,992) | $ (2,987) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets | 6 | 11 |
Long-term debt | ||
Derivatives, Fair Value | ||
Carrying amount of the hedged assets/ (liabilities) | (3,933) | (3,908) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged (liabilities) | $ (96) | $ (72) |
Accounting for Leases as a Lessor - Operating Lease Payments Maturity (Details) $ in Millions |
Jan. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 (remaining nine months) | $ 1,445 |
2021 | 1,295 |
2022 | 556 |
2023 | 113 |
2024 | 28 |
Thereafter | 2 |
Total | $ 3,439 |
Fair Value - Schedule of Assets and Liabilities on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Assets | ||
Total assets | $ 1,929 | $ 2,295 |
Liabilities | ||
Total liabilities | 130 | 147 |
Time deposits | ||
Assets | ||
Total assets | 671 | 803 |
Money market funds | ||
Assets | ||
Total assets | 607 | 859 |
Foreign bonds | ||
Assets | ||
Total assets | 124 | 133 |
Other debt securities | ||
Assets | ||
Total assets | 31 | 32 |
Interest rate contracts | ||
Assets | ||
Total assets | 96 | 73 |
Liabilities | ||
Total liabilities | 6 | 11 |
Foreign exchange contracts | ||
Assets | ||
Total assets | 399 | 392 |
Liabilities | ||
Total liabilities | 123 | 136 |
Other derivatives | ||
Assets | ||
Total assets | 1 | 3 |
Liabilities | ||
Total liabilities | 1 | 0 |
Level 1 | ||
Assets | ||
Total assets | 608 | 866 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 1 | Time deposits | ||
Assets | ||
Total assets | 0 | 0 |
Level 1 | Money market funds | ||
Assets | ||
Total assets | 607 | 859 |
Level 1 | Foreign bonds | ||
Assets | ||
Total assets | 1 | 7 |
Level 1 | Other debt securities | ||
Assets | ||
Total assets | 0 | 0 |
Level 1 | Interest rate contracts | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 1 | Foreign exchange contracts | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 1 | Other derivatives | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 2 | ||
Assets | ||
Total assets | 1,290 | 1,397 |
Liabilities | ||
Total liabilities | 130 | 147 |
Level 2 | Time deposits | ||
Assets | ||
Total assets | 671 | 803 |
Level 2 | Money market funds | ||
Assets | ||
Total assets | 0 | 0 |
Level 2 | Foreign bonds | ||
Assets | ||
Total assets | 123 | 126 |
Level 2 | Other debt securities | ||
Assets | ||
Total assets | 0 | 0 |
Level 2 | Interest rate contracts | ||
Assets | ||
Total assets | 96 | 73 |
Liabilities | ||
Total liabilities | 6 | 11 |
Level 2 | Foreign exchange contracts | ||
Assets | ||
Total assets | 399 | 392 |
Liabilities | ||
Total liabilities | 123 | 136 |
Level 2 | Other derivatives | ||
Assets | ||
Total assets | 1 | 3 |
Liabilities | ||
Total liabilities | 1 | 0 |
Level 3 | ||
Assets | ||
Total assets | 31 | 32 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 3 | Time deposits | ||
Assets | ||
Total assets | 0 | 0 |
Level 3 | Money market funds | ||
Assets | ||
Total assets | 0 | 0 |
Level 3 | Foreign bonds | ||
Assets | ||
Total assets | 0 | 0 |
Level 3 | Other debt securities | ||
Assets | ||
Total assets | 31 | 32 |
Level 3 | Interest rate contracts | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 3 | Foreign exchange contracts | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 3 | Other derivatives | ||
Assets | ||
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | $ 0 | $ 0 |
Stockholders' Equity - Changes and Reclassifications Of OCI (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss), net of taxes | $ 70 | $ (76) |
Net unrealized gains (losses) on available-for-sale securities | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 2 | 2 |
(Gains) losses reclassified into earnings | (3) | (3) |
Other comprehensive income (loss), net of taxes | (1) | (1) |
Change in net unrealized gains (losses) on cash flow hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 65 | 33 |
(Gains) losses reclassified into earnings | (60) | (117) |
Other comprehensive income (loss), net of taxes | 5 | (84) |
Change in unrealized components of defined benefit plans | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss) before reclassifications | 17 | |
(Gains) losses reclassified into earnings | 52 | |
Other comprehensive income (loss), net of taxes | 69 | 0 |
Net unrealized gains (losses) arising during the period | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
(Gains) losses reclassified into earnings | 17 | (45) |
Amortization of actuarial loss and prior service benefit | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
(Gains) losses reclassified into earnings | 57 | 49 |
Curtailments, settlements and other | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss), net of taxes | (5) | (4) |
Change in cumulative translation adjustment | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income (loss) before reclassifications | (3) | |
(Gains) losses reclassified into earnings | 0 | |
Other comprehensive income (loss), net of taxes | $ (3) | $ 9 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Cash flows from operating activities: | ||
Net earnings | $ 333 | $ 177 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 690 | 639 |
Stock-based compensation expense | 93 | 75 |
Provision for inventory and doubtful accounts | 41 | 42 |
Restructuring charges | 84 | 33 |
Deferred taxes on earnings | (28) | 370 |
Earnings from equity interests | (33) | (15) |
Other, net | (36) | 46 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 82 | 113 |
Financing receivables | (104) | (156) |
Inventory | (204) | 99 |
Accounts payable | (250) | (256) |
Taxes on earnings | (27) | (107) |
Restructuring | (87) | (110) |
Other assets and liabilities | (633) | (568) |
Net cash (used in) provided by operating activities | (79) | 382 |
Cash flows from investing activities: | ||
Investment in property, plant and equipment | (568) | (729) |
Proceeds from sale of property, plant and equipment | 462 | 157 |
Purchases of available-for-sale securities and other investments | (59) | (5) |
Maturities and sales of available-for-sale securities and other investments | 8 | 1 |
Financial collateral posted | (48) | (245) |
Financial collateral received | 147 | 281 |
Payments made in connection with business acquisitions, net of cash acquired | (6) | (76) |
Net cash used in investing activities | (64) | (616) |
Cash flows from financing activities: | ||
Short-term borrowings with original maturities less than 90 days, net | 127 | (12) |
Proceeds from debt, net of issuance costs | 340 | 389 |
Payment of debt | (450) | (334) |
Proceeds related to stock-based award activities, net | (43) | (17) |
Repurchase of common stock | (204) | (814) |
Contributions from non-controlling interests | 1 | 0 |
Cash dividends paid | (156) | (157) |
Net cash used in financing activities | (385) | (945) |
Decrease in cash, cash equivalents and restricted cash | (528) | (1,179) |
Cash, cash equivalents and restricted cash at beginning of period | 4,076 | 5,084 |
Cash, cash equivalents and restricted cash at end of period | $ 3,548 | $ 3,905 |
Condensed Consolidated Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Net revenue: | ||
Financing income | $ 113 | |
Financing income | $ 112 | |
Total net revenue | 6,949 | 7,553 |
Costs and expenses: | ||
Financing interest | 73 | 73 |
Research and development | 485 | 466 |
Selling, general and administrative | 1,218 | 1,211 |
Amortization of intangible assets | 120 | 72 |
Transformation costs | 89 | 78 |
Acquisition, disposition and other related charges | 22 | 63 |
Total costs and expenses | 6,601 | 7,097 |
Earnings from operations | 348 | 456 |
Interest and other, net | (19) | (51) |
Tax indemnification adjustments | (21) | 219 |
Non-service net periodic benefit credit | 37 | 16 |
Earnings from equity interests | 33 | 15 |
Earnings before taxes | 378 | 655 |
Provision for taxes | (45) | (478) |
Net earnings | $ 333 | $ 177 |
Net earnings per share: | ||
Basic (in dollars per share) | $ 0.26 | $ 0.13 |
Diluted (in dollars per share) | $ 0.25 | $ 0.13 |
Weighted-average shares used to compute net earnings per share: | ||
Basic (in shares) | 1,300 | 1,401 |
Diluted (in shares) | 1,315 | 1,412 |
Products | ||
Net revenue: | ||
Total net revenue | $ 4,247 | $ 4,791 |
Costs and expenses: | ||
Cost of products and services | 2,910 | 3,369 |
Services | ||
Net revenue: | ||
Total net revenue | 2,589 | 2,650 |
Costs and expenses: | ||
Cost of products and services | $ 1,684 | $ 1,765 |
Accounting for Leases as a Lessee - Leases included in the Consolidated Balance Sheet (Details) $ in Millions |
Jan. 31, 2020
USD ($)
|
---|---|
Operating Leases | |
ROU Assets | $ 1,053 |
Operating lease liabilities - current | 203 |
Operating lease liabilities - non-current | 940 |
Total operating lease liabilities | 1,143 |
Finance Leases | |
Gross finance lease ROU assets | 53 |
Less: Accumulated depreciation | (1) |
Net finance lease ROU assets | 52 |
Finance lease liabilities - current | 4 |
Finance lease liabilities - non-current | 56 |
Total finance lease liabilities | 60 |
Total ROU assets | 1,105 |
Total lease liabilities | $ 1,203 |
Balance Sheet Details - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 2,684 | $ 2,782 |
Unbilled receivables | 218 | 206 |
Allowance for doubtful accounts | (38) | (31) |
Total | $ 2,864 | $ 2,957 |
Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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:
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Overview and Summary of Significant Accounting Policies - Narrative (Details) $ in Millions |
3 Months Ended | |
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Jan. 31, 2020
USD ($)
segment
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Nov. 01, 2019
USD ($)
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Accounting Policies [Abstract] | ||
Number of new reportable segments | segment | 4 | |
Segment Reporting Information [Line Items] | ||
ROU Assets | $ 1,053 | |
Total lease liability balance | 1,143 | |
Accounting Standards Update 2016-02 | ||
Segment Reporting Information [Line Items] | ||
ROU Assets | $ 1,000 | |
Total lease liability balance | $ 1,100 | |
Accumulated Other Comprehensive Loss | Accounting Standards Update 2018-02 | ||
Segment Reporting Information [Line Items] | ||
Effects of adoption of accounting standard updates | 43 | |
Accumulated Deficit | Accounting Standards Update 2018-02 | ||
Segment Reporting Information [Line Items] | ||
Effects of adoption of accounting standard updates | $ (43) |
Accounting for Leases as a Lessee |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Leases as a Lessee | Accounting for Leases as a Lessee The Company enters into various leases as a lessee for assets including office buildings, vehicles, aviation and equipment. The Company determines if an arrangement is a lease at inception. An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term. Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and a ROU asset for the right to use the underlying asset for the lease term in the Condensed Consolidated Balance Sheets. The lease liability is measured at commencement date based on the present value of the minimum lease payments not yet paid over the lease term and the Company’s incremental borrowing rate. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate which approximates the rate at which the Company would borrow, on a secured basis, in the country were the lease was executed. The ROU asset is based on the liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. Fixed payments are included in the recognition of ROU assets and liabilities, while variable lease payments, such as maintenance or utility charges are expensed as incurred. The Company has agreements with lease and non-lease components that are accounted for separately and not included in its leased assets and corresponding liabilities for the majority of the Company’s lease agreements. The Company allocates consideration to the lease and non-lease components using their relative standalone values. For finance leases, the ROU asset is amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the lease liability is recorded separately using the interest method. For operating leases, lease expense is generally recognized on a straight-line basis over the lease term. Components of lease cost included in the Condensed Consolidated Statement of Earnings for the three months ended January 31, 2020 were as follows:
During the three months ended January 31, 2020, the Company recorded $40 million of net gain from a sale and leaseback transaction. The ROU assets and lease liabilities for operating and finance leases included on the Company's Condensed Consolidated Balance Sheet as of January 31, 2020 were as follows:
The weighted-average remaining lease term and the weighted-average discount rate for the operating and finance leases were as follows:
Supplemental cash flow information related to leases for the three months ended January 31, 2020 was as follows:
The following tables shows the future minimum lease commitments on the Company's operating leases as of January 31, 2020:
The following table shows the future minimum lease commitments on the Company’s finance leases as of January 31, 2020:
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Accounting for Leases as a Lessee | Accounting for Leases as a Lessee The Company enters into various leases as a lessee for assets including office buildings, vehicles, aviation and equipment. The Company determines if an arrangement is a lease at inception. An arrangement contains a lease when the arrangement conveys the right to control the use of an identified asset over the lease term. Upon lease commencement, the Company records a lease liability for the obligation to make lease payments and a ROU asset for the right to use the underlying asset for the lease term in the Condensed Consolidated Balance Sheets. The lease liability is measured at commencement date based on the present value of the minimum lease payments not yet paid over the lease term and the Company’s incremental borrowing rate. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate which approximates the rate at which the Company would borrow, on a secured basis, in the country were the lease was executed. The ROU asset is based on the liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. Fixed payments are included in the recognition of ROU assets and liabilities, while variable lease payments, such as maintenance or utility charges are expensed as incurred. The Company has agreements with lease and non-lease components that are accounted for separately and not included in its leased assets and corresponding liabilities for the majority of the Company’s lease agreements. The Company allocates consideration to the lease and non-lease components using their relative standalone values. For finance leases, the ROU asset is amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the lease liability is recorded separately using the interest method. For operating leases, lease expense is generally recognized on a straight-line basis over the lease term. Components of lease cost included in the Condensed Consolidated Statement of Earnings for the three months ended January 31, 2020 were as follows:
During the three months ended January 31, 2020, the Company recorded $40 million of net gain from a sale and leaseback transaction. The ROU assets and lease liabilities for operating and finance leases included on the Company's Condensed Consolidated Balance Sheet as of January 31, 2020 were as follows:
The weighted-average remaining lease term and the weighted-average discount rate for the operating and finance leases were as follows:
Supplemental cash flow information related to leases for the three months ended January 31, 2020 was as follows:
The following tables shows the future minimum lease commitments on the Company's operating leases as of January 31, 2020:
The following table shows the future minimum lease commitments on the Company’s finance leases as of January 31, 2020:
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HPE Next |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
HPE Next | HPE Next The Company extended the HPE Next initiative to fiscal 2021 in order to mitigate recent global developments and the evolving economic uncertainty. With this extension, the Company expects to incur expenses related to streamlining, upgrading and simplifying back-end operations as it implements further cost take-out actions designed to deliver incremental savings. These costs may be partially offset by gains from real estate sales. Transformation Costs During the three months ended January 31, 2020, the Company incurred $89 million of net charges which were recorded within Transformation costs in the Condensed Consolidated Statements of Earnings. 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, respectively.
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.
As of January 31, 2020 and October 31, 2019, the current restructuring liability related to the HPE Next Plan, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets, was $160 million and $164 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, 2020 and October 31, 2019 was $61 million and $56 million, respectively.
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Financial Instruments |
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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 January 31, 2020 and October 31, 2019, 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 January 31, 2020 and October 31, 2019. The estimated fair value of the available-for-sale debt investments may not be representative of values that will be realized in the future. Contractual maturities of available-for-sale debt investments were as follows:
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:
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 January 31, 2020 and October 31, 2019, information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
The amounts recorded on the Condensed Consolidated Balance Sheets relating to cumulative basis adjustments for fair value hedges were as follows;
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") for the three months ended January 31, 2020 and January 31, 2019 was as follows:
Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings The pre-tax effect of derivative instruments on the Condensed Consolidated Statements of Earnings for the three months ended January 31, 2020 and January 31, 2019 was as follows:
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Taxes on Earnings (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities included in the Condensed Consolidated Balance Sheets were as follows:
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Overview and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
---|---|
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The 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 January 31, 2020 and October 31, 2019, its results of operations for the three months ended January 31, 2020 and 2019, its cash flows for the three months ended January 31, 2020 and 2019, and its statements of stockholders' equity for the three months ended January 31, 2020 and 2019. The results of operations for the three months ended January 31, 2020 and the cash flows for the three months ended January 31, 2020 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, 2019, including "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively.
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Principles of Consolidation | Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and all 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 consolidates a Variable Interest Entity (“VIE”) where it has been determined that the Company is the primary beneficiary of the entity’s operation. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its variable interest holders. The Company also evaluates its economic interests in the VIE. 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 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 periods presented.
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Segment Realignment and Reclassifications | Segment Realignment and Reclassifications Effective at the beginning of the first quarter of fiscal 2020, Hewlett Packard Enterprise Company ("HPE") implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. As a result of these organizational changes, HPE replaced the Hybrid IT reportable segment (and the Compute, Storage and HPE Pointnext business units within it) with four new financial reporting segments: Compute, High Performance Compute & Mission-Critical Systems ("HPC & MCS"), Storage, and Advisory and Professional Services ("A & PS"). The new Compute segment combines the general purpose server and certain workload optimized server portfolios that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit. The HPC & MCS segment consists of high performance compute, mission-critical systems, and edge compute offerings that were previously a part of the Hybrid IT-Compute business unit and the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit. The new Storage segment combines the former Hybrid IT-Storage business unit, the related operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit and the hyperconverged infrastructure products that were previously a part of the Hybrid IT-Compute business unit. Finally, the A & PS segment consists of the consultative-led services that were previously a part of the Hybrid IT-HPE Pointnext business unit. In addition, the Intelligent Edge segment now includes the Data Center Networking ("DC Networking") operational services business that was previously a part of the Hybrid IT-HPE Pointnext business unit. The DC Networking business, other than operational services, had been transferred to the Intelligent Edge segment in a prior realignment. The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the realignment of net revenue, operating profit and total assets for each of the businesses as described above. These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings, net earnings per share ("EPS") or total assets.Segment Policy There have been no significant changes to the Company's segment accounting policies disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2019, except for the organizational changes described in Note 1, "Overview and Summary of Significant Accounting Policies". Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate costs and eliminations, stock-based compensation expense related to corporate and certain global functions, amortization of initial direct costs, amortization of intangible assets, transformation costs, acquisition, disposition and other related charges.
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Use of Estimates | Use of Estimates The preparation of financial statements in accordance with Generally Accepted Accounting Principles ("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.
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Foreign Currency Translation | Foreign Currency Translation The Company predominately uses the U.S. dollar as its functional currency. Assets and liabilities denominated in non-U.S. currencies are remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. Net revenue, costs and expenses denominated in non-U.S. currencies are recorded in U.S. dollars at the average rates of exchange prevailing during the period. The Company includes gains or losses from foreign currency remeasurement in Interest and other, net in the Consolidated Statements of Earnings and gains and losses from cash flow hedges in Net revenue as the hedged revenue is recognized. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and the Company records the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and includes them as a component of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. The effect of foreign currency exchange rates on cash and cash equivalents was not material for any of the periods presented.
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Recently Adopted Accounting Pronouncements and Recently Enacted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2018, the FASB issued guidance that allows companies to reclassify stranded tax effects resulting from U.S. tax reform, from accumulated other comprehensive income (loss) to retained earnings. The guidance also allows the reclassification of these stranded tax effects to be recorded upon adoption of the guidance rather than at the actual cessation date. The Company adopted the guidance in the first quarter of fiscal 2020 and elected not to reclassify prior periods. As a result, $43 million of tax benefit was reclassified from accumulated other comprehensive loss into accumulated deficit, primarily comprised of amounts relating to currency translation adjustments and net unrealized gains (losses) on cash flow hedges. In August 2017, the FASB amended the existing accounting standards for hedge accounting. The amendments expand an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also simplifies certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. In April 2019, the FASB issued certain clarifications to address partial term fair value hedges, fair value hedge basis adjustments and certain transition requirements. The Company adopted the guidance effective November 1, 2019 and there was no financial impact on the Condensed Consolidated Financial Statements upon adoption. The FASB issued guidance in February 2016, with amendments in 2018 and 2019, which changes the accounting standards for leases. The Company adopted the guidance in the first quarter of fiscal 2020, beginning November 1, 2019, using the modified retrospective transition method whereby prior comparative periods will not be restated in the Consolidated Financial Statements. Accordingly, results and related disclosures for the reporting periods beginning after November 1, 2019 are presented under the new lease standard, while comparative prior period results and related disclosures are not adjusted and continue to be reported in accordance with the historic accounting standards. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the package of practical expedients which did not require the reassessment of prior conclusions related to contracts containing leases, lease classification and initial direct costs ("IDC"). The adoption of the new lease standard resulted in the recognition of $1.0 billion of right-of-use assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet. As a lessor, no transition adjustments were recorded from the adoption of ASC 842. The adoption of the standard had no impact on the Company's Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows or debt-covenant compliance under its current agreements. Refer to Note 7 “Accounting for Leases as a Lessee” for accounting policy and additional information. Recently Enacted Accounting Pronouncements In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging. The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments. The Company is required to adopt the guidance in the first quarter of fiscal 2022. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In December 2019, the FASB amended the existing accounting standards for income taxes. The amendments clarify and simplify the accounting for income taxes by eliminating certain exceptions to the general principles. The Company is required to adopt the guidance in the first quarter of fiscal 2022. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company is required to adopt the guidance in the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit pension plans. The Company is required to adopt the guidance in the first quarter of fiscal 2021. Early adoption is permitted. As the guidance represents a change to disclosure only, the Company does not expect the guidance to have an impact on its Consolidated Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and lease receivables, and record an allowance for the portion of the amortized cost the entity does not expect to collect. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued several amendments to the new credit losses standard, including an amendment requiring entities to include certain expected recoveries of the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. The Company is required to adopt the guidance in the first quarter of fiscal 2021. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In April 2019, the FASB amended its standards on recognizing and measuring financial instruments to address the scope of the guidance, the requirement for remeasurement when using the measurement alternative and certain disclosure requirements. The Company is required to adopt the guidance in the first quarter of fiscal 2021. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. There have been no other significant changes to the Company's accounting policies or recently adopted or enacted accounting pronouncements disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2019.
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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.
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Accounting for Leases as a Lessor - Credit Risk Profile of Gross Financing Receivables (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Gross financing receivables | ||
Gross financing receivables | $ 8,736 | $ 8,652 |
Low | ||
Gross financing receivables | ||
Gross financing receivables | 4,435 | 4,432 |
Moderate | ||
Gross financing receivables | ||
Gross financing receivables | 4,005 | 3,933 |
High | ||
Gross financing receivables | ||
Gross financing receivables | $ 296 | $ 287 |
Accounting for Leases as a Lessor - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Leases [Abstract] | ||
Financing receivable term, low end of range | 2 years | |
Financing receivable term, high end of range | 5 years | |
Financing receivable sold | $ 38 | $ 48 |
Accounting for Leases as a Lessor - Operating Lease Assets Included in Machinery and Equipment (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Equipment leased to customers | $ 7,185 | |
Accumulated depreciation | (3,101) | |
Total | 4,084 | |
Lessor, Lease, Description [Line Items] | ||
Equipment leased to customers | $ 11,530 | 11,901 |
Accumulated depreciation | (5,819) | (5,847) |
Total | 5,711 | $ 6,054 |
Equipment Leased to Customers | ||
Lessor, Lease, Description [Line Items] | ||
Equipment leased to customers | 7,097 | |
Accumulated depreciation | (3,117) | |
Total | $ 3,980 |
HPE Next - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
Oct. 31, 2019 |
|
Restructuring Cost and Reserve [Line Items] | |||
Transformation costs | $ 89 | $ 78 | |
Current restructuring liability reported in Accrued restructuring | 184 | $ 195 | |
HPE Next | |||
Restructuring Cost and Reserve [Line Items] | |||
Transformation costs | 89 | 83 | |
Current restructuring liability reported in Accrued restructuring | 160 | 164 | |
Long-term portion of restructuring reserve, recorded in Other liabilities | $ 61 | $ 56 | |
Transformation Costs | HPE Next | |||
Restructuring Cost and Reserve [Line Items] | |||
Transformation costs | 78 | ||
Non-Service Net Periodic Benefit Credit | HPE Next | |||
Restructuring Cost and Reserve [Line Items] | |||
Transformation costs | $ 5 |
Taxes on Earnings - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
Oct. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate (as a percent) | 11.90% | 73.00% | |
Net income tax charges (benefits) | $ (16) | $ 428 | |
Pre-Separation tax matters | 21 | 34 | |
Income tax benefit from U.S. tax reform | 375 | ||
Income tax charges related to future withholding costs on intercompany distributions | 37 | ||
Income tax benefit on restructuring charges, separation costs, transformation costs and acquisition and other related charges | 30 | ||
Unrecognized tax benefits | 2,200 | $ 2,300 | |
Unrecognized tax benefits that would affect effective tax rate if realized | 730 | 772 | |
Interest (income) expense | (5) | $ 25 | |
Accrued income tax for interest and penalties | $ 124 | $ 129 | |
Likelihood of no resolution period | 12 months | ||
Reasonably possible reduction in existing unrecognized tax benefits within the next 12 months | $ 84 | ||
Likelihood of conclusion period for certain federal, foreign and state tax issues | 12 months |
Accounting for Leases as a Lessee - Future Minimum Lease Commitments on Operating Leases (Details) $ in Millions |
Jan. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of fiscal 2020 | $ 179 |
2021 | 195 |
2022 | 174 |
2023 | 157 |
2024 | 135 |
Thereafter | 437 |
Total future lease payments | 1,277 |
Less: imputed interest | (134) |
Total lease liability balance | $ 1,143 |
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Current assets: | ||
Cash and cash equivalents | $ 3,171 | $ 3,753 |
Accounts receivable, net of allowance for doubtful accounts | 2,864 | 2,957 |
Financing receivables, net of allowance for doubtful accounts | 3,591 | 3,572 |
Inventory | 2,560 | 2,387 |
Assets held for sale | 12 | 46 |
Other current assets | 2,553 | 2,428 |
Total current assets | 14,751 | 15,143 |
Property, plant and equipment | 5,711 | 6,054 |
Long-term financing receivables and other assets | 10,179 | 8,918 |
Investments in equity interests | 2,290 | 2,254 |
Goodwill | 18,305 | 18,306 |
Intangible assets | 1,008 | 1,128 |
Total assets | 52,244 | 51,803 |
Current liabilities: | ||
Notes payable and short-term borrowings | 4,510 | 4,425 |
Accounts payable | 5,332 | 5,595 |
Employee compensation and benefits | 1,009 | 1,522 |
Taxes on earnings | 173 | 186 |
Deferred revenue | 3,267 | 3,234 |
Accrued restructuring | 184 | 195 |
Other accrued liabilities | 4,279 | 4,002 |
Total current liabilities | 18,754 | 19,159 |
Long-term debt | 9,362 | 9,395 |
Other non-current liabilities | 6,885 | 6,100 |
Commitments and contingencies | ||
HPE stockholders' equity: | ||
Preferred stock, $0.01 par value (300 shares authorized; none issued) | 0 | 0 |
Common stock, $0.01 par value (9,600 shares authorized; 1,293 and 1,294 shares issued and outstanding at January 31, 2020 and October 31, 2019, respectively) | 13 | 13 |
Additional paid-in capital | 28,287 | 28,444 |
Accumulated deficit | (7,411) | (7,632) |
Accumulated other comprehensive loss | (3,700) | (3,727) |
Total HPE stockholders' equity | 17,189 | 17,098 |
Non-controlling interests | 54 | 51 |
Total stockholders' equity | 17,243 | 17,149 |
Total liabilities and stockholders' equity | $ 52,244 | $ 51,803 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|||||||
Cash dividends declared (in dollars per share) | $ 0.12 | $ 0.1125 | ||||||
Accounting Standards Update 2014-09 | ||||||||
Effects of adoption of accounting standard updates | $ 143 | |||||||
Accumulated Deficit | ||||||||
Effects of adoption of accounting standard updates | $ 43 | [1] | (2,162) | [2] | ||||
Accumulated Deficit | Accounting Standards Update 2016-16 | ||||||||
Effects of adoption of accounting standard updates | $ (2,300) | |||||||
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Accounting for Leases as a Lessee - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Net gain from sale and leaseback transaction | $ 40 |
Balance Sheet Details - Notes Payable and Short-Term Borrowings (Details) $ in Millions |
Feb. 20, 2020
USD ($)
tranche
|
Jan. 31, 2020
USD ($)
|
Oct. 31, 2019
USD ($)
|
---|---|---|---|
Long-term debt | |||
Current portion of long-term debt | $ 3,399 | $ 3,441 | |
FS commercial paper | 696 | 698 | |
Notes payable to banks, lines of credit and other | 415 | 286 | |
Total | $ 4,510 | $ 4,425 | |
Subsequent Event | Asset-backed Debt Securities | |||
Long-term debt | |||
Amount issued | $ 755 | ||
Number of tranches | tranche | 6 | ||
Discount rate at issuance | 99.99% | ||
Weighted-average interest rate | 1.87% | ||
Subsequent Event | Asset-backed Debt Securities | Asset-backed Securities Maturing March 2021 | |||
Long-term debt | |||
Amount issued | $ 243 | ||
Subsequent Event | Asset-backed Debt Securities | Asset-backed Securities Maturing February 2030 | |||
Long-term debt | |||
Amount issued | $ 512 |
Financial Instruments - Pre-tax Effect of Derivative Instruments on Statement of Earnings (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net revenue | $ 6,949 | $ 7,553 |
Interest and other, net | (19) | (51) |
Net revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total gains (losses) | 26 | 80 |
Interest and other, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total gains (losses) | (14) | (168) |
Interest rate contracts | Net revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives in fair value hedging relationships | 0 | 0 |
Interest rate contracts | Interest and other, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives in fair value hedging relationships | (29) | (158) |
Foreign currency contracts | Net revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gains (losses) reclassified from accumulated other comprehensive income into income | 26 | 80 |
Gains (losses) on derivatives not designated as hedging instruments | 0 | 0 |
Foreign currency contracts | Interest and other, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gains (losses) reclassified from accumulated other comprehensive income into income | 43 | 53 |
Gains (losses) on derivatives not designated as hedging instruments | (54) | (231) |
Other derivatives | Net revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | 0 | 0 |
Other derivatives | Interest and other, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | (3) | 10 |
Derivatives designated as hedging instruments | Interest rate contracts | Net revenue | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives in fair value hedging relationships | 0 | 0 |
Derivatives designated as hedging instruments | Interest rate contracts | Interest and other, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on derivatives in fair value hedging relationships | $ 29 | $ 158 |
Accounting for Leases as a Lessor - Assets and Liabilities of VIE (Details) - VIE Primary Beneficiary - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Other current assets | $ 25 | $ 76 |
Short-term | 183 | 194 |
Long-term | 194 | 229 |
Property, plant and equipment | 267 | 303 |
Notes payable and short-term borrowings, net of unamortized debt issuance costs | 319 | 385 |
Long-term debt, net of unamortized debt issuance costs | $ 307 | $ 370 |
Financial Instruments - Cash Equivalents and Available-for-Sale Investments (Details) - USD ($) $ in Millions |
Jan. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Debt securities, Amortized Cost | $ 133 | |
Debt securities, Gross Unrealized Gain | 22 | $ 23 |
Debt securities, Fair Value | 155 | |
Total cash and equivalents and available-for-sale investments, Cost basis | 1,411 | 1,804 |
Total cash equivalents and available-for-sale debt investments | 1,433 | 1,827 |
Cost | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 1,278 | 1,662 |
Cost | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 671 | 803 |
Cost | Money market funds | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 607 | 859 |
Fair Value | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 1,278 | 1,662 |
Fair Value | Time deposits | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 671 | 803 |
Fair Value | Money market funds | ||
Cash and Cash Equivalents [Line Items] | ||
Total cash equivalents | 607 | 859 |
Debt securities | ||
Cash and Cash Equivalents [Line Items] | ||
Debt securities, Amortized Cost | 133 | 142 |
Debt securities, Gross Unrealized Gain | 22 | 23 |
Debt securities, Fair Value | 155 | 165 |
Foreign bonds | ||
Cash and Cash Equivalents [Line Items] | ||
Debt securities, Amortized Cost | 103 | 110 |
Debt securities, Gross Unrealized Gain | 21 | 23 |
Debt securities, Fair Value | 124 | 133 |
Other debt securities | ||
Cash and Cash Equivalents [Line Items] | ||
Debt securities, Amortized Cost | 30 | 32 |
Debt securities, Gross Unrealized Gain | 1 | 0 |
Debt securities, Fair Value | $ 31 | $ 32 |
Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Jan. 31, 2020 |
Oct. 31, 2019 |
|
Equity, Class of Treasury Stock [Line Items] | ||
Remaining authorized repurchase amount | $ 2,300 | |
Share Repurchase program | ||
Equity, Class of Treasury Stock [Line Items] | ||
Common stock retired (in shares) | 12.8 | 0.5 |
Open share repurchases during period (in shares) | 0.6 | |
Repurchases of common stock recorded as a reduction to stockholders' equity | $ 204 |
Goodwill |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill Goodwill allocated to the Company's reportable segments as of January 31, 2020 and the change in the respective carrying amounts during the three months then ended were as follows:
Effective as of November 1, 2019, the Company's operations were realigned into seven segments for financial reporting purposes. The Company's reporting units containing goodwill are consistent with the reportable segments identified in Note 2, "Segment Information". As a result of this realignment, the Company performed an interim goodwill impairment analysis for the new segments as of November 1, 2019, which did not result in any goodwill impairment charges. 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.
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Taxes on Earnings |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes on Earnings | Taxes on Earnings Provision for Taxes The Company's effective tax rate was 11.9% and 73.0% for the three months ended January 31, 2020 and 2019, respectively. The effective tax rate for the three months ended January 31, 2020 was due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world. The effective tax rate for the three months ended January 31, 2019 was significantly impacted by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). For the three months ended January 31, 2020, the Company recorded $16 million of net income tax benefits related to various items discrete to the period. The amount primarily included $21 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company shares joint and several liability with HP Inc. and for which the Company is indemnified by HP Inc. For the three months ended January 31, 2019, the Company recorded $428 million of net income tax charges related to various items discrete to the period. The amount primarily included $375 million of income tax charges related to changes in U.S. federal and state valuation allowances as a result of impacts of the Tax Act, $37 million of income tax charges related to future withholding costs on distributions of earnings and $34 million of income tax charges related to the change in pre-Separation tax liabilities for which the Company shared joint and several liability with HP Inc., partially offset by $30 million of income tax benefits on restructuring charges and acquisition, disposition and other related charges. Uncertain Tax Positions As of January 31, 2020 and October 31, 2019, the amount of unrecognized tax benefits was $2.2 billion and $2.3 billion, respectively, of which up to $730 million and $772 million, respectively, 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. The Company recognized $5 million of interest income and $25 million of interest expense for the three months ended January 31, 2020 and 2019, respectively. As of January 31, 2020 and October 31, 2019, the Company had $124 million and $129 million, respectively, recorded 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. The Company does not expect complete resolution of any audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving intercompany transactions, joint and several tax liabilities and other matters. Accordingly, the Company believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $84 million 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:
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Accounting for Leases as a Lessor (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Financing Receivables | The components of financing receivables were as follows:
(1) The Company includes the current portion in Financing receivables, net of allowance for doubtful accounts, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets.
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Sales-type and Direct Financing Leases, Lease Receivable, Maturity | As of January 31, 2020, scheduled maturities of the Company's minimum lease payments receivable were as follows:
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Minimum Lease Payments Receivable | Prior to the adoption of the new lease standard, scheduled maturities of the Company's minimum lease payments receivable as of October 31, 2019 were as follows:
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Credit Risk Profile of Gross Financing Receivables | The credit risk profile of gross financing receivables, based on internal risk ratings, was as follows:
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Allowance for Doubtful Accounts for Financing Receivables | The allowance for doubtful accounts for financing receivables as of January 31, 2020 and October 31, 2019 and the respective changes during the three and twelve months then ended were as follows:
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Gross Financing Receivables and Related Allowance Evaluated for Loss | The gross financing receivables and related allowance evaluated for loss were as follows:
(1) Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.
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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:
(2) Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.
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Operating Lease Assets Included in Machinery and Equipment | Operating lease assets included in Property, plant and equipment in the Condensed Consolidated Balance Sheets were as follows:
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Lessor Operating Lease Payments Maturity | As of January 31, 2020, minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:
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Lessor Lease Activity | The following table presents amounts included in the Condensed Consolidated statement of Earnings related to lessor activity as of January 31, 2020:
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Schedule of Variable Interest Entities | The assets in the table below include those that can be used to settle the obligations of the VIE. Additionally, general creditors do not have recourse to the assets of the VIE.
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Stockholders' Equity (Tables) |
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Jan. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes Related to Other Comprehensive Income (Loss) | Taxes related to Other Comprehensive Income (Loss)
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Changes and Reclassifications Related to Other Comprehensive Income (Loss), Net of Taxes | Changes and reclassifications related to Other Comprehensive Income (Loss), net of taxes
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Components of Accumulated Other Comprehensive Loss, Net of Taxes | The components of Accumulated other comprehensive loss, net of taxes as of January 31, 2020, and changes during the three months ended January 31, 2020 were as follows:
(1) Reflects the adoption of the FASB guidance on stranded tax effects. Refer Note 1 for more information.
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Segment Information - Segment Operating Results from Continuing Operations (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2020 |
Jan. 31, 2019 |
|
Segment Reporting Information [Line Items] | ||
Net revenue | $ 6,949 | $ 7,553 |
Segment earnings (loss) from operations | 348 | 456 |
Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (78) | (140) |
Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 7,027 | 7,693 |
Segment earnings (loss) from operations | 675 | 733 |
Compute | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 2,963 | 3,509 |
Compute | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (48) | (66) |
Compute | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 3,011 | 3,575 |
Segment earnings (loss) from operations | 286 | 340 |
HPC & MCS | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 816 | 728 |
HPC & MCS | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (7) | (51) |
HPC & MCS | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 823 | 779 |
Segment earnings (loss) from operations | 49 | 98 |
Storage | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 1,235 | 1,337 |
Storage | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (15) | (19) |
Storage | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 1,250 | 1,356 |
Segment earnings (loss) from operations | 226 | 254 |
A & PS | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 242 | 239 |
A & PS | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (1) | (2) |
A & PS | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 243 | 241 |
Segment earnings (loss) from operations | (2) | (32) |
Intelligent Edge | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 715 | 706 |
Intelligent Edge | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (5) | 1 |
Intelligent Edge | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 720 | 705 |
Segment earnings (loss) from operations | 70 | 24 |
Financial Services | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 857 | 916 |
Financial Services | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | (2) | (3) |
Financial Services | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 859 | 919 |
Segment earnings (loss) from operations | 73 | 77 |
Corporate Investments | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 121 | 118 |
Corporate Investments | Intersegment net revenue and other | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 0 | 0 |
Corporate Investments | Operating Segment | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 121 | 118 |
Segment earnings (loss) from operations | $ (27) | $ (28) |
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