(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 July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 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 | |||||||||||||||||||||||
Impairment of goodwill | |||||||||||||||||||||||
Transformation costs | |||||||||||||||||||||||
Disaster charges (recovery) | ( | ||||||||||||||||||||||
Acquisition, disposition and other related charges | |||||||||||||||||||||||
Total costs and expenses | |||||||||||||||||||||||
Earnings (loss) from operations | ( | ( | |||||||||||||||||||||
Interest and other, net | ( | ( | ( | ( | |||||||||||||||||||
Tax indemnification adjustments | ( | ( | ( | ||||||||||||||||||||
Non-service net periodic benefit credit | |||||||||||||||||||||||
Earnings from equity interests | |||||||||||||||||||||||
(Loss) earnings before taxes | ( | ( | ( | ||||||||||||||||||||
Benefit (provision) for taxes | ( | ||||||||||||||||||||||
Net earnings (loss) | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Net earnings (loss) per share: | |||||||||||||||||||||||
Basic | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Diluted | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Weighted-average shares used to compute net earnings (loss) per share: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Net earnings (loss) | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Other comprehensive (loss) income before taxes: | |||||||||||||||||||||||
Change in net unrealized gains (losses) on available-for-sale securities: | |||||||||||||||||||||||
Net unrealized gains (losses) arising during the period | |||||||||||||||||||||||
(Gains) losses reclassified into earnings | ( | ( | ( | ||||||||||||||||||||
( | |||||||||||||||||||||||
Change in net unrealized (losses) gains on cash flow hedges: | |||||||||||||||||||||||
Net unrealized (losses) gains arising during the period | ( | ( | |||||||||||||||||||||
Net losses (gains) reclassified into earnings | ( | ( | ( | ||||||||||||||||||||
( | ( | ( | |||||||||||||||||||||
Change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Net unrealized (losses) gains arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Amortization of net actuarial loss and prior service benefit | |||||||||||||||||||||||
Curtailments, settlements and other | |||||||||||||||||||||||
Change in cumulative translation adjustment | ( | ( | ( | ||||||||||||||||||||
Other comprehensive (loss) income before taxes | ( | ||||||||||||||||||||||
Benefit (provision) for taxes | |||||||||||||||||||||||
Other comprehensive (loss) income, net of taxes | ( | ||||||||||||||||||||||
Comprehensive (loss) income | $ | ( | $ | $ | ( | $ |
As of | |||||||||||
July 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, $ | |||||||||||
Common stock, $ | |||||||||||
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 | $ | $ |
Nine Months Ended July 31, | |||||||||||
2020 | 2019 | ||||||||||
In millions | |||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) earnings | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Impairment of goodwill | |||||||||||
Stock-based compensation expense | |||||||||||
Provision for inventory and doubtful accounts | |||||||||||
Restructuring charges | |||||||||||
Deferred taxes on (loss) earnings | ( | ||||||||||
Earnings from equity interests | ( | ( | |||||||||
Dividends received from equity investees | |||||||||||
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 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 | ( | ( | |||||||||
(Payments) proceeds related to stock-based award activities, net | ( | ||||||||||
Repurchase of common stock | ( | ( | |||||||||
Cash dividends paid to non-controlling interests | ( | ||||||||||
Contributions from non-controlling interests | |||||||||||
Cash dividends paid | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Increase (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 July 31, 2020 | Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||
In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 30, 2020 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at July 31, 2020 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended July 31, 2020 | Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Equity Attributable to the Company | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||
In millions, except number of shares in thousands | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at October 31, 2019 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Effects of adoption of accounting standard updates (1) | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance at July 31, 2020 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 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 April 30, 2019 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Effects of adoption of accounting standard updates(1) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at July 31, 2019 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended July 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 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding related to vesting of employee stock plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Effects of adoption of accounting standard updates(1) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at July 31, 2019 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Compute | HPC & MCS | Storage | A & PS | Intelligent Edge | Financial Services | Corporate Investments | Total | ||||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||||||||||
Three months ended July 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Intersegment net revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Three months ended July 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Intersegment net revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Nine months ended July 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Intersegment net revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Nine months ended July 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Intersegment net revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment net revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Segment earnings (loss) from operations | $ | $ | $ | $ | ( | $ | $ | $ | ( | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Net Revenue: | |||||||||||||||||||||||
Total segments | $ | $ | $ | $ | |||||||||||||||||||
Eliminations of intersegment net revenue | ( | ( | ( | ( | |||||||||||||||||||
Total Hewlett Packard Enterprise consolidated net revenue | $ | $ | $ | $ | |||||||||||||||||||
(Loss) 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 | ( | ( | ( | ( | |||||||||||||||||||
Impairment of goodwill | ( | ||||||||||||||||||||||
Transformation costs | ( | ( | ( | ( | |||||||||||||||||||
Disaster (charges) recovery | ( | ( | |||||||||||||||||||||
Acquisition, disposition and other related charges | ( | ( | ( | ( | |||||||||||||||||||
Interest and other, net | ( | ( | ( | ( | |||||||||||||||||||
Tax indemnification adjustments | ( | ( | ( | ||||||||||||||||||||
Non-service net periodic benefit credit | |||||||||||||||||||||||
Earnings from equity interests | |||||||||||||||||||||||
Total Hewlett Packard Enterprise consolidated (loss) earnings before taxes | $ | ( | $ | ( | $ | ( | $ |
As of | |||||||||||
July 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 July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 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 and nine months ended July 31, | |||||
2020 | |||||
In millions | |||||
Program management(1) | $ | ||||
IT Costs | |||||
Restructuring charges | |||||
Total | $ |
Three months ended July 31, | Nine months ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Program management(1) | $ | $ | $ | $ | |||||||||||||||||||
IT costs | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
(Gain) loss on real estate sales | ( | ( | |||||||||||||||||||||
Impairment on real estate assets | — | ||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Cost Optimization and Prioritization Plan | HPE Next Plan | ||||||||||||||||||||||
Employee Severance | Infrastructure and other | Employee Severance | Infrastructure and other | ||||||||||||||||||||
In millions | In millions | ||||||||||||||||||||||
Liability as of October 31, 2019 | $ | $ | $ | $ | |||||||||||||||||||
Charges | |||||||||||||||||||||||
Cash payments | ( | ( | |||||||||||||||||||||
Non-cash items | ( | ||||||||||||||||||||||
Liability as of July 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Total costs incurred to date, as of July 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Total costs expected to be incurred, as of July 31, 2020 | $ | $ | $ | $ |
Three months ended July 31, | Nine months ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 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) cost | ( | ( | |||||||||||||||||||||
Settlement loss(1) | |||||||||||||||||||||||
Special termination benefits(1) | |||||||||||||||||||||||
Net benefit (credit) cost | $ | ( | $ | $ | ( | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Deferred tax assets | $ | $ | |||||||||
Deferred tax liabilities | ( | ( | |||||||||
Deferred tax assets net of deferred tax liabilities | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash(1) | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Finished goods | $ | $ | |||||||||
Purchased parts and fabricated assemblies | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Land | $ | $ | |||||||||
Buildings and leasehold improvements | |||||||||||
Machinery and equipment, including equipment held for lease | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Total | $ | $ |
Nine Months Ended July 31, 2020 | |||||
In millions | |||||
Balance at beginning of period | $ | ||||
Charges | |||||
Adjustments related to pre-existing warranties | |||||
Settlements made | ( | ||||
Balance at end of period | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Accounts receivable, net | |||||||||||
Accounts receivable | $ | $ | |||||||||
Unbilled receivables | |||||||||||
Allowance for doubtful accounts | ( | ( | |||||||||
Total | $ | $ |
Three Months Ended July 31, 2020 | Nine Months Ended July 31, 2020 | ||||||||||
In millions | |||||||||||
Operating lease cost | $ | $ | |||||||||
Finance lease cost | |||||||||||
Sublease rental income | ( | ( | |||||||||
Total lease cost | $ | $ |
Balance Sheet Classification | As of July 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 | $ |
As of July 31, 2020 | |||||||||||
Operating Leases | Finance Leases | ||||||||||
Weighted-average remaining lease term (in years) | |||||||||||
Weighted-average discount rate | % | % |
Cash Flow Statement Activity | Nine Months Ended July 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 July 31, 2020 | |||||||||||
Operating Leases | Finance Leases | ||||||||||
Fiscal year | In millions | ||||||||||
Remainder of fiscal 2020 | $ | $ | |||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
Thereafter | |||||||||||
Total future lease payments | $ | $ | |||||||||
Less: imputed interest | ( | ( | |||||||||
Total lease liabilities | $ | $ |
As of October 31, 2019 | |||||||||||
Operating Leases | Finance Leases | ||||||||||
In millions | |||||||||||
Fiscal year | |||||||||||
2020 | $ | $ | |||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 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) | $ | $ |
As of | |||||
July 31, 2020 | |||||
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 | $ |
As of | |||||
October 31, 2019 | |||||
Fiscal year | In millions | ||||
2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Risk Rating: | |||||||||||
Low | $ | $ | |||||||||
Moderate | |||||||||||
High | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 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 | |||||||||||
July 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 | $ | $ |
As of | |||||||||||
July 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) | $ | $ |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
In millions | |||||||||||
Equipment leased to customers | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
Total | $ | $ |
As of | |||||
July 31, 2020 | |||||
Fiscal year | In millions | ||||
Remainder of fiscal 2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total | $ |
Three Months Ended July 31, 2020 | Nine Months Ended July 31, 2020 | ||||||||||
In millions | |||||||||||
Sales-type leases and direct financing leases: | |||||||||||
Interest income | $ | $ | |||||||||
Lease income - operating leases | |||||||||||
Total lease income | $ | $ |
As of | |||||||||||
July 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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Goodwill impairment | ( | ( | |||||||||||||||||||||||||||||||||
Goodwill adjustments | |||||||||||||||||||||||||||||||||||
Balance at July 31, 2020 | $ | $ | $ | $ | $ | $ |
As of July 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 | |||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
As of July 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 Debt Investments: | |||||||||||||||||||||||||||||||||||
Foreign bonds | |||||||||||||||||||||||||||||||||||
Other debt securities | |||||||||||||||||||||||||||||||||||
Total available-for-sale debt investments | |||||||||||||||||||||||||||||||||||
Total cash equivalents and available-for-sale debt investments | $ | $ | $ | $ | $ | $ |
July 31, 2020 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
In millions | |||||||||||
Due in more than five years | $ | $ | |||||||||
$ | $ |
As of July 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 July 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) | $ |
Carrying amount of the hedged assets/ (liabilities) | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/ (liabilities) | ||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||
July 31, 2020 | October 31, 2019 | July 31, 2020 | October 31, 2019 | ||||||||||||||||||||
In millions | In millions | ||||||||||||||||||||||
Notes payable and short-term borrowings | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
Long-term debt | $ | ( | $ | ( | $ | ( | $ | ( |
Gains (Losses) Recognized in OCI on Derivatives | |||||||||||||||||||||||
Three months ended July 31, 2020 | Three months ended July 31, 2019 | Nine months ended July 31, 2020 | Nine months ended July 31, 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Derivatives in Cash Flow Hedging relationship | |||||||||||||||||||||||
Foreign exchange contracts | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Interest rate contracts | ( | ||||||||||||||||||||||
Derivatives in Net Investment Hedging relationship | |||||||||||||||||||||||
Foreign exchange contracts | ( | ( | ( | ||||||||||||||||||||
Total | $ | ( | $ | $ | ( | $ |
Gains (Losses) Recognized in Income | |||||||||||||||||||||||||||||||||||||||||||||||
Three months ended July 31, 2020 | Three months ended July 31, 2019 | Nine months ended July 31, 2020 | Nine months ended July 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Net revenue | Interest and other, net | Net revenue | Interest and other, net | Net revenue | Interest and other, net | Net revenue | Interest and other, net | ||||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||||||||||
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Earnings in which the effects of fair value hedges, cash flow hedges and derivatives not designated as hedging instruments are recorded | $ | $ | ( | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
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 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate 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) | $ | $ | ( | $ | $ | $ | $ | ( | $ | $ |
As of | |||||||||||
July 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 | $ | $ |
Fiscal year | In millions | ||||
Remainder of fiscal 2020 | |||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total | $ |
Three months ended July 31, | Nine months ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Taxes on change in net unrealized (losses) gains on cash flow hedges: | |||||||||||||||||||||||
Tax benefit (provision) on net unrealized (losses) gains arising during the period | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Tax provision (benefit) on net losses (gains) reclassified into earnings | |||||||||||||||||||||||
Taxes on change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Tax benefit (provision) on net unrealized (losses) gains 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 (provision) benefit on change in cumulative translation adjustment | ( | ||||||||||||||||||||||
Tax benefit (provision) on other comprehensive (loss) income | $ | $ | $ | $ |
Three months ended July 31, | Nine months ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Other comprehensive (loss) income, net of taxes: | |||||||||||||||||||||||
Change in net unrealized gains (losses) on available-for-sale securities: | |||||||||||||||||||||||
Net unrealized gains (losses) arising during the period | $ | $ | $ | $ | |||||||||||||||||||
(Gains) losses reclassified into earnings | ( | ( | ( | ||||||||||||||||||||
( | |||||||||||||||||||||||
Change in net unrealized (losses) gains on cash flow hedges: | |||||||||||||||||||||||
Net unrealized (losses) gains arising during the period | ( | ( | |||||||||||||||||||||
Net losses (gains) reclassified into earnings | ( | ( | ( | ||||||||||||||||||||
( | ( | ( | |||||||||||||||||||||
Change in unrealized components of defined benefit plans: | |||||||||||||||||||||||
Net unrealized (losses) gains arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Amortization of net actuarial loss and prior service benefit | |||||||||||||||||||||||
Curtailments, settlements and other | |||||||||||||||||||||||
Change in cumulative translation adjustment | ( | ( | ( | ||||||||||||||||||||
Other comprehensive (loss) income, 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 (loss) income before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||
Reclassifications of (gains) losses into earnings | ( | ( | |||||||||||||||||||||||||||
Balance at end of period | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions, except per share amounts | |||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net earnings (loss) | $ | $ | ( | $ | ( | $ | |||||||||||||||||
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 (loss) per share: | |||||||||||||||||||||||
Basic | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Diluted | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Anti-dilutive weighted-average stock awards(1) |
HPE Consolidated | Compute | HPC & MCS | Storage | A & PS | Intelligent Edge | Financial Services | Corporate Investments | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions, except for per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue(1) | $ | 6,816 | $ | 3,389 | $ | 649 | $ | 1,128 | $ | 226 | $ | 684 | $ | 811 | $ | 119 | |||||||||||||||||||||||||||||||
Year-over-year change % | (5.6) | % | (0.3) | % | 2.5 | % | (10.1) | % | (6.6) | % | (12.4) | % | (8.7) | % | (8.5) | % | |||||||||||||||||||||||||||||||
Earnings (loss) from operations(2) | $ | 12 | $ | 288 | $ | 36 | $ | 145 | $ | (4) | $ | 59 | $ | 65 | $ | (27) | |||||||||||||||||||||||||||||||
Earnings (loss) from operations as a % of net revenue | 0.2 | % | 8.5 | % | 5.5 | % | 12.9 | % | (1.8) | % | 8.6 | % | 8.0 | % | (22.7) | % | |||||||||||||||||||||||||||||||
Year-over-year change percentage points | 1.3 pts | (4.4) pts | (2.6) pts | (3.6) pts | 1.9 pts | 1.8 pts | (0.7) pts | (3.5) pts | |||||||||||||||||||||||||||||||||||||||
Net earnings | $ | 9 | |||||||||||||||||||||||||||||||||||||||||||||
Diluted net earnings per share | $ | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||
Supplemental Non-GAAP information: | |||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP earnings from operations | $ | 484 | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP earnings from operations as a % of net revenue | 7.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net earnings | $ | 419 | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP diluted net earnings per share | $ | 0.32 |
HPE Consolidated | Compute | HPC & MCS | Storage | A & PS | Intelligent Edge | Financial Services | Corporate Investments | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions, except for per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue(1) | $ | 19,774 | $ | 9,040 | $ | 2,061 | $ | 3,464 | $ | 706 | $ | 2,069 | $ | 2,503 | $ | 364 | |||||||||||||||||||||||||||||||
Year-over-year change % | (9.8) | % | (12.2) | % | (3.4) | % | (11.8) | % | (5.0) | % | (4.7) | % | (7.4) | % | (2.4) | % | |||||||||||||||||||||||||||||||
(Loss) earnings from operations(2) | $ | (474) | $ | 699 | $ | 118 | $ | 516 | $ | (4) | $ | 202 | $ | 213 | $ | (82) | |||||||||||||||||||||||||||||||
(Loss) earnings from operations as a % of net revenue | (2.4) | % | 7.7 | % | 5.7 | % | 14.9 | % | (0.6) | % | 9.8 | % | 8.5 | % | (22.5) | % | |||||||||||||||||||||||||||||||
Year-over-year change percentage points | (6.1) pts | (2.9) pts | (5.6) pts | (3.0) pts | 6.8 pts | 4.6 pts | — pts | (0.5) pts | |||||||||||||||||||||||||||||||||||||||
Net loss | $ | (479) | |||||||||||||||||||||||||||||||||||||||||||||
Diluted net loss per share | $ | (0.37) | |||||||||||||||||||||||||||||||||||||||||||||
Supplemental Non-GAAP information: | |||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP earnings from operations | $ | 1,451 | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP earnings from operations as a % of net revenue | 7.3 | % | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net earnings | $ | 1,279 | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP diluted net earnings per share | $ | 0.98 |
Three Months Ended July 31, 2020 | Diluted net earnings per share | Nine Months Ended July 31, 2020 | Diluted net earnings per share | ||||||||||||||||||||
In millions | In millions | ||||||||||||||||||||||
GAAP net earnings (loss) | $ | 9 | $ | 0.01 | $ | (479) | $ | (0.37) | |||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of initial direct costs | 3 | — | 9 | 0.01 | |||||||||||||||||||
Amortization of intangible assets | 95 | 0.07 | 299 | 0.23 | |||||||||||||||||||
Impairment of goodwill | — | — | 865 | 0.67 | |||||||||||||||||||
Transformation costs | 357 | 0.27 | 646 | 0.49 | |||||||||||||||||||
Disaster charges | 2 | — | 24 | 0.02 | |||||||||||||||||||
Acquisition, disposition and other related charges | 15 | 0.01 | 82 | 0.06 | |||||||||||||||||||
Tax indemnification adjustments | 30 | 0.03 | 86 | 0.07 | |||||||||||||||||||
Non-service net periodic benefit credit | (28) | (0.02) | (101) | (0.08) | |||||||||||||||||||
Loss from equity interests(1) | 36 | 0.03 | 110 | 0.09 | |||||||||||||||||||
Adjustments for taxes | (100) | (0.08) | (262) | (0.21) | |||||||||||||||||||
Non-GAAP net earnings | $ | 419 | $ | 0.32 | $ | 1,279 | $ | 0.98 | |||||||||||||||
GAAP earnings (loss) from operations | $ | 12 | $ | (474) | |||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization of initial direct costs | 3 | 9 | |||||||||||||||||||||
Amortization of intangible assets | 95 | 299 | |||||||||||||||||||||
Impairment of goodwill | — | 865 | |||||||||||||||||||||
Transformation costs | 357 | 646 | |||||||||||||||||||||
Disaster charges | 2 | 24 | |||||||||||||||||||||
Acquisition, disposition and other related charges | 15 | 82 | |||||||||||||||||||||
Non-GAAP earnings from operations | $ | 484 | $ | 1,451 | |||||||||||||||||||
GAAP operating profit margin | 0.2 | % | (2.4) | % | |||||||||||||||||||
Non-GAAP adjustments | 6.9 | % | 9.7 | % | |||||||||||||||||||
Non-GAAP operating profit margin | 7.1 | % | 7.3 | % | |||||||||||||||||||
GAAP Net revenue | $ | 6,816 | $ | 19,774 | |||||||||||||||||||
GAAP Cost of Sales | 4,749 | 13,511 | |||||||||||||||||||||
GAAP Gross profit | $ | 2,067 | $ | 6,263 | |||||||||||||||||||
Non-GAAP adjustments | |||||||||||||||||||||||
Amortization of initial direct costs | $ | 3 | $ | 9 | |||||||||||||||||||
Acquisition, disposition and other related charges(2) | $ | — | $ | 27 | |||||||||||||||||||
Non-GAAP Gross Profit | $ | 2,070 | $ | 6,299 | |||||||||||||||||||
GAAP gross profit margin | 30.3 | % | 31.7 | % | |||||||||||||||||||
Non-GAAP adjustments | 0.1 | % | 0.2 | % | |||||||||||||||||||
Non-GAAP gross profit margin | 30.4 | % | 31.9 | % |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Dollars | % of Revenue | Dollars | % of Revenue | Dollars | % of Revenue | Dollars | % of Revenue | ||||||||||||||||||||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 6,816 | 100.0 | % | $ | 7,217 | 100.0 | % | $ | 19,774 | 100.0 | % | $ | 21,920 | 100.0 | % | |||||||||||||||||||||||||||||||
Cost of sales | 4,749 | 69.7 | 4,768 | 66.1 | % | 13,511 | 68.3 | % | 14,820 | 67.6 | % | ||||||||||||||||||||||||||||||||||||
Gross profit | 2,067 | 30.3 | 2,449 | 33.9 | % | 6,263 | 31.7 | % | 7,100 | 32.4 | % | ||||||||||||||||||||||||||||||||||||
Research and development | 455 | 6.7 | 481 | 6.7 | % | 1,390 | 7.0 | % | 1,404 | 6.4 | % | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 1,131 | 16.6 | 1,253 | 17.3 | % | 3,458 | 17.6 | % | 3,678 | 16.8 | % | ||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 95 | 1.4 | 58 | 0.9 | % | 299 | 1.4 | % | 199 | 0.9 | % | ||||||||||||||||||||||||||||||||||||
Impairment of goodwill | — | — | — | — | % | 865 | 4.4 | % | — | — | % | ||||||||||||||||||||||||||||||||||||
Transformation costs | 357 | 5.2 | 170 | 2.4 | % | 646 | 3.3 | % | 302 | 1.4 | % | ||||||||||||||||||||||||||||||||||||
Disaster charges (recovery) | 2 | — | — | — | % | 24 | 0.1 | % | (7) | — | % | ||||||||||||||||||||||||||||||||||||
Acquisition, disposition and other related charges | 15 | 0.2 | 563 | 7.7 | % | 55 | 0.3 | % | 710 | 3.2 | % | ||||||||||||||||||||||||||||||||||||
Earnings (loss) from operations | 12 | 0.2 | (76) | (1.1) | % | (474) | (2.4) | % | 814 | 3.7 | |||||||||||||||||||||||||||||||||||||
Interest and other, net | (71) | (1.0) | (70) | (1.0) | % | (158) | (0.8) | % | (139) | (0.6) | |||||||||||||||||||||||||||||||||||||
Tax indemnification adjustments | (30) | (0.5) | (134) | (1.8) | % | (86) | (0.5) | % | 89 | 0.4 | |||||||||||||||||||||||||||||||||||||
Non-service net periodic benefit credit | 28 | 0.4 | 12 | 0.2 | % | 101 | 0.5 | % | 45 | 0.2 | |||||||||||||||||||||||||||||||||||||
Earnings from equity interests | 27 | 0.4 | 3 | — | % | 50 | 0.3 | % | 21 | 0.1 | |||||||||||||||||||||||||||||||||||||
(Loss) earnings before taxes | (34) | (0.5) | (265) | (3.7) | % | (567) | (2.9) | % | 830 | 3.8 | |||||||||||||||||||||||||||||||||||||
Benefit (provision) for taxes | 43 | 0.6 | 238 | 3.3 | % | 88 | 0.5 | % | (261) | (1.2) | |||||||||||||||||||||||||||||||||||||
Net earnings (loss) | $ | 9 | 0.1 | % | $ | (27) | (0.4) | % | $ | (479) | (2.4) | % | $ | 569 | 2.6 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Cost of sales | $ | 8 | $ | 7 | $ | 30 | $ | 30 | |||||||||||||||
Research and development | 16 | 15 | 62 | 55 | |||||||||||||||||||
Selling, general and administrative | 31 | 36 | 123 | 122 | |||||||||||||||||||
Transformation costs | — | — | — | 2 | |||||||||||||||||||
Acquisition, disposition and other related charges | — | — | 1 | — | |||||||||||||||||||
Total | $ | 55 | $ | 58 | $ | 216 | $ | 209 |
Three Months Ended July 31, 2020 | Nine Months Ended July 31, 2020 | ||||||||||
Percentage points | |||||||||||
Compute | (0.2) | (5.7) | |||||||||
HPC & MCS | 0.2 | (0.3) | |||||||||
Storage | (1.8) | (2.1) | |||||||||
A & PS | (0.2) | (0.2) | |||||||||
Intelligent Edge | (1.3) | (0.5) | |||||||||
Financial Services | (1.1) | (0.9) | |||||||||
Corporate Investments | (0.1) | (0.1) | |||||||||
Total Segment | (4.5) | (9.8) | |||||||||
Elimination of Intersegment net revenue | (1.1) | — | |||||||||
Total HPE | (5.6) | (9.8) |
Three months ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 3,389 | $ | 3,400 | (0.3) | % | |||||||||||
Earnings from operations | $ | 288 | $ | 439 | (34.4) | % | |||||||||||
Earnings from operations as a % of net revenue | 8.5 | % | 12.9 | % |
Nine months ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 9,040 | $ | 10,293 | (12.2) | % | |||||||||||
Earnings from operations | $ | 699 | $ | 1,086 | (35.6) | % | |||||||||||
Earnings from operations as a % of net revenue | 7.7 | % | 10.6 | % | |||||||||||||
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 649 | $ | 633 | 2.5 | % | |||||||||||
Earnings from operations | $ | 36 | $ | 51 | (29.4) | % | |||||||||||
Earnings from operations as a % of net revenue | 5.5 | % | 8.1 | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 2,061 | $ | 2,133 | (3.4) | % | |||||||||||
Earnings from operations | $ | 118 | $ | 241 | (51.0) | % | |||||||||||
Earnings from operations as a % of net revenue | 5.7 | % | 11.3 | % |
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 1,128 | $ | 1,255 | (10.1) | % | |||||||||||
Earnings from operations | $ | 145 | $ | 207 | (30.0) | % | |||||||||||
Earnings from operations as a % of net revenue | 12.9 | % | 16.5 | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 3,464 | $ | 3,929 | (11.8) | % | |||||||||||
Earnings from operations | $ | 516 | $ | 705 | (26.8) | % | |||||||||||
Earnings from operations as a % of net revenue | 14.9 | % | 17.9 | % |
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 226 | $ | 242 | (6.6) | % | |||||||||||
Loss from operations | $ | (4) | $ | (9) | 55.6 | % | |||||||||||
Loss from operations as a % of net revenue | (1.8) | % | (3.7) | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 706 | $ | 743 | (5.0) | % | |||||||||||
Loss from operations | $ | (4) | $ | (55) | 92.7 | % | |||||||||||
Loss from operations as a % of net revenue | (0.6) | % | (7.4) | % |
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 684 | $ | 781 | (12.4) | % | |||||||||||
Earnings from operations | $ | 59 | $ | 53 | 11.3 | % | |||||||||||
Earnings from operations as a % of net revenue | 8.6 | % | 6.8 | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 2,069 | $ | 2,171 | (4.7) | % | |||||||||||
Earnings from operations | $ | 202 | $ | 113 | 78.8 | % | |||||||||||
Earnings from operations as a % of net revenue | 9.8 | % | 5.2 | % |
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 811 | $ | 888 | (8.7) | % | |||||||||||
Earnings from operations | $ | 65 | $ | 77 | (15.6) | % | |||||||||||
Earnings from operations as a % of net revenue | 8.0 | % | 8.7 | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 2,503 | $ | 2,703 | (7.4) | % | |||||||||||
Earnings from operations | $ | 213 | $ | 231 | (7.8) | % | |||||||||||
Earnings from operations as a % of net revenue | 8.5 | % | 8.5 | % |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
In millions | |||||||||||||||||||||||
Financing volume | $ | 1,491 | $ | 1,696 | $ | 4,392 | $ | 4,480 |
As of | |||||||||||
July 31, 2020 | October 31, 2019 | ||||||||||
Dollars in millions | |||||||||||
Financing receivables, gross | $ | 9,043 | $ | 8,652 | |||||||
Net equipment under operating leases | 4,026 | 4,084 | |||||||||
Capitalized profit on intercompany equipment transactions(1) | 322 | 382 | |||||||||
Intercompany leases(1) | 93 | 100 | |||||||||
Gross portfolio assets | 13,484 | 13,218 | |||||||||
Allowance for doubtful accounts(2) | 142 | 131 | |||||||||
Operating lease equipment reserve | 60 | 60 | |||||||||
Total reserves | 202 | 191 | |||||||||
Net portfolio assets | $ | 13,282 | $ | 13,027 | |||||||
Reserve coverage | 1.5 | % | 1.4 | % | |||||||
Debt-to-equity ratio(3) | 7.0x | 7.0x |
Three Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 119 | $ | 130 | (8.5) | % | |||||||||||
Loss from operations | $ | (27) | $ | (25) | (8.0) | % | |||||||||||
Loss from operations as a % of net revenue | (22.7) | % | (19.2) | % |
Nine Months Ended July 31, | |||||||||||||||||
2020 | 2019 | % Change | |||||||||||||||
Dollars in millions | |||||||||||||||||
Net revenue | $ | 364 | $ | 373 | (2.4) | % | |||||||||||
Loss from operations | $ | (82) | $ | (82) | — | % | |||||||||||
Loss from operations as a % of net revenue | (22.5) | % | (22.0) | % |
Nine months ended July 31, | |||||||||||
2020 | 2019 | ||||||||||
In millions | |||||||||||
Net cash provided by operating activities | $ | 1,493 | $ | 2,565 | |||||||
Net cash used in investing activities | (1,154) | (1,399) | |||||||||
Net cash provided by (used in) financing activities | 4,522 | (2,239) | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 4,861 | $ | (1,073) |
Three months ended July 31, | |||||||||||||||||
2020 | 2019 | Change | |||||||||||||||
Days of sales outstanding in accounts receivable ("DSO") | 38 | 37 | 1 | ||||||||||||||
Days of supply in inventory ("DOS") | 66 | 42 | 24 | ||||||||||||||
Days of purchases outstanding in accounts payable ("DPO") | (114) | (98) | (16) | ||||||||||||||
Cash conversion cycle | (10) | (19) | 9 |
As of July 31, 2020 | |||||
In millions | |||||
Commercial paper programs | $ | 5,013 | |||
Uncommitted lines of credit | $ | 1,279 | |||
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 | ||||||||||||||||||||||||||||
2.27 | 8-K | 001-37483 | 2.1 | July 13, 2020 | ||||||||||||||||||||||||||||
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 | 4.2 | April 9, 2020 | ||||||||||||||||||||||||||||
4.12 | 8-K | 001-37483 | 4.3 | April 9, 2020 |
4.13 | 8-K | 001-37483 | 4.2 | July 17, 2020 | ||||||||||||||||||||||||||||
4.14 | 8-K | 001-37483 | 4.3 | July 17, 2020 | ||||||||||||||||||||||||||||
4.15 | 8-K | 001-37483 | 4.12 | October 13, 2015 | ||||||||||||||||||||||||||||
4.16 | 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 | 333-217349 | 4.3 | April 18, 2017 | ||||||||||||||||||||||||||||
10.15 | S-8 | 333-217349 | 4.4 | April 18, 2017 | ||||||||||||||||||||||||||||
10.16 | S-8 | 333-217438 | 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 | November 1, 2017 |
10.22 | S-8 | 333-221254 | 4.4 | November 1, 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 | 10-Q | 001-37483 | 10.32 | March 9, 2020 | ||||||||||||||||||||||||||||
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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‡ |
HEWLETT PACKARD ENTERPRISE COMPANY | ||||||||
/s/ TAREK A. ROBBIATI | ||||||||
Tarek A. Robbiati Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory) |
/s/ ANTONIO F. NERI | |||||
Antonio F. Neri President and Chief Executive Officer (Principal Executive Officer) |
/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 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 300,000,000 | 300,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,600,000,000 | 9,600,000,000 |
Common stock, shares issued | 1,286,000,000 | 1,294,000,000 |
Common stock, shares outstanding | 1,286,000,000 | 1,294,000,000 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Cash dividends declared (in dollars per share) | $ 0.1125 | $ 0.24 | $ 0.3375 |
Stockholders' equity | $ 16,206 | ||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2019-12 | |||
Stockholders' equity | $ 2,300 | $ 2,300 | |
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2014-09 | |||
Stockholders' equity | 122 | 122 | |
Accumulated Deficit | |||
Stockholders' equity | $ (7,959) | $ (8,377) | $ (7,959) |
Overview and Summary of Significant Accounting Policies |
9 Months Ended |
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Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Background Hewlett Packard Enterprise Company ("Hewlett Packard Enterprise", "HPE", or the "Company") is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. Hewlett Packard Enterprise enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future. Hewlett Packard Enterprise's customers range from small- and medium-sized businesses ("SMBs") to large global enterprises and governmental entities. On November 1, 2015, the Company became an independent publicly-traded company through a pro rata distribution by HP Inc. ("former Parent" or "HPI"), formerly known as Hewlett-Packard Company ("HP Co."), of 100% of the outstanding shares of Hewlett Packard Enterprise Company to HP Inc.'s stockholders (the "Separation"). Acquisition On July 11, 2020, the Company entered into a definitive agreement to acquire Silver Peak Systems, Inc. ("Silver Peak"), an SD-WAN (Software-Defined Wide Area Network) leader for approximately $925 million in cash. The transaction is expected to close during the fourth quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions. Silver Peak's results of operations will be included within the Intelligent Edge segment. 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 July 31, 2020 and October 31, 2019, its results of operations for the three and nine months ended July 31, 2020 and 2019, its cash flows for the nine months ended July 31, 2020 and 2019, and its statements of stockholders' equity for the three and nine months ended July 31, 2020 and 2019. The results of operations for the three and nine months ended July 31, 2020 and the cash flows for the nine months ended July 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. 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. Segment Realignment and Reclassifications Effective at the beginning of the first quarter of fiscal 2020, 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 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 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. See Note 2, "Segment Information", for a further discussion of the Company's segment realignment. Use of Estimates The preparation of financial statements requires management to make estimates, judgements and assumptions that affect the amounts reported in the Company's Condensed Consolidated Financial Statements and accompanying notes. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that the novel coronavirus pandemic ("COVID-19") could have on our significant accounting estimates. Significant estimates that are based on a forecast include inventory reserves, provision for taxes, valuation allowance for deferred taxes, and impairment assessments of goodwill, intangible assets and other long lived assets. The Company believes that these estimates, judgements and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates change, it could adversely affect the Company’s results of operations. Additionally, as the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates, judgements and assumptions may evolve as conditions change. Actual results could differ materially from these estimates under different assumptions or conditions. 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 Condensed 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. Recently Adopted Accounting Pronouncements In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions through December 31, 2022 to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). This guidance was effective upon issuance, as a result the Company adopted the guidance in the second quarter of fiscal 2020 and there was no financial impact on the Condensed Consolidated Financial Statements upon adoption. 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 related 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. In February 2016, with amendments in 2018 and 2019, the FASB issued guidance which changes the accounting standards for leases. The Company adopted the guidance in the first quarter of fiscal 2020, beginning November 1, 2019, using the modified retrospective transition method whereby prior comparative periods will not be restated in the Consolidated Financial Statements. Accordingly, results and related disclosures for the reporting periods beginning after November 1, 2019 are presented under the new lease standard, while comparative prior period results and related disclosures are not adjusted and continue to be reported in accordance with the historic accounting standards. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the package of practical expedients which did not require the reassessment of prior conclusions related to contracts containing leases, lease classification and initial direct costs ("IDC"). The adoption of the new lease standard on November 1, 2019 resulted in the recognition of $1.0 billion of right-of-use assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet. As a lessor, no transition adjustments were recorded from the adoption of ASC 842. The adoption of the accounting standard for leases had no impact on the Company's Condensed Consolidated Statements of Earnings and Condensed Consolidated Statements of Cash Flows or debt-covenant compliance under its current agreements. Refer to Note 7 “Accounting for Leases as a Lessee” for accounting policy and additional information. Recently Enacted Accounting Pronouncements In March 2020, the FASB issued clarifications relating to its existing guidance on financial instruments. Some clarifications included in this amendment are effective upon issuance and these do not have an impact on HPE’s current accounting practices. For those clarifications which affect the guidance as it relates to the measurement of credit losses, the Company is required to adopt them in the first quarter of fiscal 2021. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging. The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In December 2019, the FASB amended the existing accounting standards for income taxes. The amendments clarify and simplify the accounting for income taxes by eliminating certain exceptions to the general principles. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit pension plans. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments however, the Company does not expect the guidance to have an impact on its Consolidated Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and financing receivables, and record an allowance for the portion of the amortized cost the entity does not expect to collect. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued several amendments to the new credit losses standard, including an amendment requiring entities to include certain expected recoveries of the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. The Company is required to adopt the guidance in the first quarter of fiscal 2021. 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 and does not expect it to be material 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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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 also be purchased through on-premises flexible consumption models, such as HPE GreenLake. Storage. HPE provides workload optimized storage product and service offerings that are AI-driven and built for cloud environments with GreenLake as-a-service consumption and flexible investment options. Powered by HPE InfoSight advanced analytics and machine learning and HPE Cloud Volumes data mobility, HPE delivers intelligent storage for hybrid cloud environments. Key solutions include an intelligent hyperconverged infrastructure (“HCI”) portfolio with HPE Nimble Storage dHCI, a disaggregated HCI solution for the enterprise data center and HPE SimpliVity, a hyperconverged platform for virtualization. The portfolio also includes HPE Primera, HPE Nimble Storage and HPE 3PAR Storage for mission-critical workloads and general purpose workloads, respectively, and big data solutions running on HPE Apollo Servers along with BlueData and MapR technology for expertise in artificial intelligence, machine learning and analytics data management. Storage also provides comprehensive data protection with HPE StoreOnce and HPE Recovery Manager Central, solutions for secondary workloads and traditional tape, storage networking and disk products, such as HPE Modular Storage Arrays ("MSA") and HPE XP. Advisory and Professional Services provides consultative-led services, 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 incubation projects, and the Communications and Media Solutions ("CMS") business. Segment Policy There have been no 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 operating 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, impairment of goodwill, transformation costs, disaster charges (recovery), acquisition, disposition and other related charges. Segment Operating Results Segment net revenue and segment operating results were as follows:
The reconciliation of segment operating results to Hewlett Packard Enterprise Condensed Consolidated Financial statements was as follows:
Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated total assets were as follows:
The Company’s net revenue by geographic region was as follows:
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Transformations Programs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transformation Programs | Transformation Programs Transformation programs are comprised of the cost optimization and prioritization plan, and the HPE Next Initiative. On May 19, 2020, the Board of Directors of HPE (the "Board") approved the cost optimization and prioritization plan which focuses on realigning the workforce to areas of growth while simplifying and evolving its product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model, marketing experiences, and real estate strategies. This plan is expected to be implemented through fiscal year 2022 during which time the Company expects to incur expenses as a result of changes to the Company’s workforce, business model and business process. The HPE Next initiative is expected to be implemented through fiscal year 2021 during which time the Company expects to incur expenses predominantly related to streamlining, upgrading and simplifying back-end operations, IT infrastructure and real estate initiatives. These costs are expected to be partially offset by gains from real estate sales. Transformation Costs During the three and nine months ended July 31, 2020, the Company incurred $238 million of charges related to the cost optimization and prioritization plan which is recorded within Transformation costs in the Condensed Consolidated Statements of Earnings, the components of which were as follows:
(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the cost optimization and prioritization plan. During the three and nine months ended July 31, 2020, the Company incurred $119 million and $408 million respectively, of net charges relating to HPE Next which were recorded within Transformation costs in the Condensed Consolidated Statements of Earnings. During the three and nine months ended July 31, 2019, the Company incurred $172 million and $310 million of net charges, of which $170 million and $302 million were recorded within Transformation costs, and $2 million and $8 million were recorded within Non-service net periodic benefit credit, in the Condensed Consolidated Statements of Earnings, respectively.
(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative. Restructuring Plan On May 19, 2020, the Company's Board of Directors approved a restructuring plan in connection with the cost optimization and prioritization plan. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee works councils and other employee representatives, as appropriate. On October 16, 2017, the Company's Board of Directors approved a restructuring plan in connection with the HPE Next initiative ("the HPE Next Plan") and on September 20, 2018, the Company's Board of Directors approved a revision to that restructuring plan. As a result of the revision to the plan, cost amounts and total headcount exits were revised and the completion of the workforce reductions was extended to fiscal year 2020. The changes to the workforce will vary by country, based on business needs, local legal requirements and consultations with employee work councils and other employee representatives, as appropriate.
As of July 31, 2020 and October 31, 2019, the current restructuring liability related to the transformation programs, reported in Accrued restructuring in the Condensed Consolidated Balance Sheets, was $366 million and $164 million, respectively. The non-current restructuring liability related to the transformation programs, reported in Other non-current liabilities in the Condensed Consolidated Balance Sheets as of July 31, 2020 and October 31, 2019 was $55 million and $56 million, respectively.
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Retirement Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Plans | Retirement Benefit Plans The Company's net pension benefit cost for defined benefit plans recognized in the Condensed Consolidated Statements of Earnings 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.
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Taxes on Earnings |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes on Earnings | Taxes on Earnings Provision for Taxes The Company's effective tax rate was 126.5% and 89.8% for the three months ended July 31, 2020 and 2019, respectively, and 15.5% and 31.4% for the nine months ended July 31, 2020 and 2019, respectively. The effective tax rates for the three and nine months ended July 31, 2020 were impacted by income tax benefits resulting from tax rate changes and differed from the statutory tax rate due to favorable tax rates associated with certain earnings from the Company’s operations in lower tax jurisdictions throughout the world. The effective tax rate for the nine months ended July 31, 2020 also included the effects of the non-deductible goodwill impairment. The effective tax rates for the three and nine months ended July 31, 2019 were significantly impacted by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and the settlement of certain pre-Separation tax liabilities of HP Inc. The Company's effective tax rate is based on forecasted annual results which may fluctuate significantly through the remainder of fiscal 2020 due to the uncertain economic impact of COVID-19 on the Company's operating results. For the three and nine months ended July 31, 2020, the Company recorded $86 million and $253 million of net income tax benefits, respectively, related to various items discrete to the period. For the three months ended July 31, 2020, the amount primarily included $72 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges and $30 million of income tax benefits related to tax rate changes on deferred taxes. For the nine months ended July 31, 2020, the amount primarily included $120 million of income tax benefits related to transformation costs, and acquisition, disposition and other related charges, $57 million of income tax benefits related to Indian distribution tax rate changes, $56 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company shares joint and several liability with HP Inc. and for which the Company is indemnified by HP Inc., and $30 million of income tax benefits related to tax rate changes on deferred taxes. For the three and nine months ended July 31, 2019, the Company recorded $303 million of net income tax benefits and $80 million of net income tax charges, respectively, related to various items discrete to the period. For the three months ended July 31, 2019, this amount primarily included $308 million of income tax benefits predominantly related to the change in pre-Separation tax liabilities as a result of the effective settlement of the U.S. federal income tax audit of fiscal years 2013 through 2015 for HP Inc. for which the Company shared joint and several liability and $18 million of net income tax benefits on transformation costs, and acquisition, disposition and other related charges, partially offset by $19 million of income tax charges related to uncertain tax reserves pertaining to separation activities and $14 million of income tax charges related to changes in U.S. state valuation allowances as a result of impacts of the Tax Act. For the nine months ended July 31, 2019, the amount primarily included $365 million of income tax charges related to changes in U.S. federal and state valuation allowances as a result of impacts of the Tax Act, $40 million of income tax charges related to future withholding tax costs on distributions of earnings, and $19 million of income tax charges related to uncertain tax reserves pertaining to separation activities, partially offset by $264 million of income tax benefits related to the change in pre-Separation tax liabilities for which the Company shared joint and several liability with HP Inc., and $75 million of income tax benefits on transformation costs, and acquisition, disposition and other related charges. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted into law in response to COVID-19. The CARES Act, among other things, provides tax relief to businesses, including the deferral of certain payroll taxes, relief for retaining employees, and other income tax provisions. In addition to the CARES Act, governments around the world are also enacting comparable legislation to address COVID-19 economic impacts. The effects of these legislative changes were not material to the Condensed Consolidated Financial Statements for the three and nine months ended July 31, 2020. Uncertain Tax Positions As of July 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 $711 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 Benefit (provision) for taxes in the Condensed Consolidated Statements of Earnings. The Company recognized $13 million of interest expense and $43 million of interest income for the three months ended July 31, 2020 and 2019, respectively, and $12 million of interest income for each of the nine months ended July 31, 2020 and 2019. As of July 31, 2020 and October 31, 2019, the Company had $117 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 tax authorities regarding tax matters in various jurisdictions. The Company does not expect complete resolution of any audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving 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 $105 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:
Tax Matters Agreement with HP Inc., and Other Income Tax Matters On October 30, 2019, the Company and HP Inc. entered into a Termination and Mutual Release Agreement and terminated the Tax Matters Agreement. Under the Termination and Mutual Release Agreement, HP Inc. agreed to pay $300 million of which $200 million was paid in fiscal 2019 and $50 million was paid in the third quarter of fiscal 2020. The Company expects to receive the remaining $50 million in fiscal 2021.
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Balance Sheet Details |
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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
Warranties The Company's aggregate product warranty liability as of July 31, 2020, and changes 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:
The Company has third-party revolving short-term financing arrangements intended to facilitate the working capital requirements of certain customers. During the three and nine months ended July 31, 2020, the Company sold $1.0 billion and $2.8 billion of trade receivables, respectively. During the twelve months ended October 31, 2019, the Company sold $4.5 billion of trade receivables. The Company recorded an obligation of $154 million and $80 million in Notes payable and short-term borrowings in its Condensed Consolidated Balance Sheets as of July 31, 2020 and October 31, 2019 respectively, related to the trade receivables sold and collected from the third-party for which the revenue recognition was deferred. Contract Liabilities Contract liabilities consist of deferred revenue. The aggregate balance of current and non-current deferred revenue was $6.1 billion and $6.0 billion as of July 31, 2020 and October 31, 2019, respectively. During the nine months ended July 31, 2020, approximately $2.7 billion of the 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 July 31, 2020, the aggregate amount of remaining performance obligations was $6.1 billion. The Company expects to recognize approximately 21% of this amount as revenue over the remaining fiscal year. Costs to Obtain a Contract As of July 31, 2020, the current and non-current portions of the capitalized costs to obtain a contract were $52 million and $74 million, respectively. As of October 31, 2019, the current and non-current portions of the capitalized costs to obtain a contract were $49 million and $74 million, respectively. The current and non-current portions of the capitalized costs to obtain a contract were included in Other current assets and Long-term financing receivables and other assets, respectively, in the Condensed Consolidated Balance Sheet. For the three and nine months ended July 31, 2020, the Company amortized $15 million and $43 million, respectively, of capitalized costs to obtain a contract. For the three and nine months ended July 31, 2019, the Company amortized $12 million and $34 million, respectively, of capitalized costs to obtain a contract. The amortized capitalized costs to obtain a contract are included in Selling, general and administrative expense in the Condensed Consolidated Statement of Earnings.
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Accounting for Leases as a Lessee |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Leases as a Lessee | Accounting for Leases as a LesseeThe 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 Sheet. 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 where the lease was executed. The ROU asset is based on the lease 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 were as follows:
During the nine months ended July 31, 2020, the Company recorded $41 million of net gain from a sale and leaseback transaction. During the three months ended July 31, 2020, the Company recorded $1 million gain from a sale and leaseback transaction. The ROU assets and lease liabilities for operating and finance leases included on the Hewlett Packard Enterprise Condensed Consolidated Balance Sheet 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 was as follows:
The following tables shows the future payments on the Company's operating and finance leases:
As of July 31, 2020, the Company entered into $212 million of operating leases that have not yet commenced and are not yet recorded on the Condensed Consolidated Balance Sheet. These operating leases are scheduled to commence between remainder of Fiscal 2020 and 2022 and contain lease terms of 5 to 15 years. Prior to the adoption of the new lease standard, the future minimum lease commitments on the Company's operating and finance leases were:
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Accounting for Leases as a Lessee | Accounting for Leases as a LesseeThe 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 Sheet. 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 where the lease was executed. The ROU asset is based on the lease 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 were as follows:
During the nine months ended July 31, 2020, the Company recorded $41 million of net gain from a sale and leaseback transaction. During the three months ended July 31, 2020, the Company recorded $1 million gain from a sale and leaseback transaction. The ROU assets and lease liabilities for operating and finance leases included on the Hewlett Packard Enterprise Condensed Consolidated Balance Sheet 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 was as follows:
The following tables shows the future payments on the Company's operating and finance leases:
As of July 31, 2020, the Company entered into $212 million of operating leases that have not yet commenced and are not yet recorded on the Condensed Consolidated Balance Sheet. These operating leases are scheduled to commence between remainder of Fiscal 2020 and 2022 and contain lease terms of 5 to 15 years. Prior to the adoption of the new lease standard, the future minimum lease commitments on the Company's operating and finance leases were:
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Accounting for Leases as a Lessor |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Leases as a Lessor | Accounting for Leases as a Lessor The Company’s lease offerings are non-cancelable and the payment schedule primarily consists of fixed payments. Variable payments that are based on an index are included in lease receivables. The Company allocates consideration amongst lease components and non-lease components on a relative standalone selling price basis, when lease arrangements include multiple performance obligations. At the end of the lease term, the Company allows the client to either return the equipment, purchase the equipment or renew the lease based on mutually agreed upon terms. The Company retains a residual position in equipment through lease and finance agreements which is equivalent to an estimated market value. The residual amount is established prior to lease inception, based upon estimated equipment values at end of lease using product road map trends, historical analysis, future projections and remarketing experience. The Company’s residual amounts are evaluated at least annually to assess the appropriateness of our carrying values. Any anticipated declines in specific future residual values that are considered to be other-than-temporary would be recorded in current earnings. The Company is able to optimize the recovery of residual values by selling equipment in place, extending lease arrangements on a fixed term basis, entering into a monthly usage rental term beyond the initial lease term, and selling lease returned equipment in the secondary market. The contractual lease agreement also identifies return conditions that ensures the leased equipment will be in good operating condition upon return minus any normal wear and tear. During the residual review process, product changes, product updates, as well as market conditions are reviewed and adjustments if other than temporary are made to residual values in accordance with the impact of any such changes. The remarketing sales organization closely manages the sale of equipment lease returns to optimize the recovery of outstanding residual by product. Financing Receivables Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. The net investment in the lease is measured as the sum of the present value of lease receivable, the estimated unguaranteed residual value of the equipment less unearned income and allowance for credit losses. These receivables typically have terms ranging from to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of financing receivables were as follows:
(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. Scheduled maturities of the Company's minimum lease payments receivable were as follows:
Prior to the adoption of the new lease standard, scheduled maturities of the Company's minimum lease payments receivable were as follows:
Sale of Financing Receivables During the nine months ended July 31, 2020 and 2019, the Company entered into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. During the nine months ended July 31, 2020 and 2019, the Company sold $60 million and $153 million, respectively, of financing receivables. Credit Quality Indicators The credit risk profile of gross financing receivables, based on internal risk ratings, was as follows:
Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment. Allowance for Doubtful Accounts The allowance for doubtful accounts for financing receivables as of July 31, 2020 and October 31, 2019 and the respective changes during the nine and twelve months then ended were as follows:
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. Non-Accrual and Past-Due Financing Receivables The following table summarizes the aging and non-accrual status of gross financing receivables:
(1)Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables. (2)Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables. Operating Leases Operating lease assets included in Property, plant and equipment in the Condensed Consolidated Balance Sheets were as follows:
Minimum future rentals on non-cancelable operating leases related to leased equipment were as follows:
If a lease is classified as an operating lease, the Company records lease revenue on a straight line basis over the lease term. At commencement of an operating lease, initial direct costs are deferred and are expensed over the lease term on the same basis as the lease revenue is recorded. The following table presents amounts included in the Condensed Consolidated Statement of Earnings related to lessor activity:
Variable Interest Entities In June 2020, February 2020 and September 2019, the Company issued asset-backed debt securities under a fixed-term securitization program to private investors. The asset-backed debt securities are collateralized by the U.S. fixed-term financing receivables and leased equipment in the offering, which is held by a Special Purpose Entity (“SPE”). The SPE meets the definition of a VIE and is consolidated, along with the associated debt, into the Condensed Consolidated Financial Statements as the Company is the primary beneficiary of the VIE. The SPE is a bankruptcy-remote legal entity with separate assets and liabilities. The purpose of the SPE is to facilitate the funding of customer receivables and leased equipment in the capital markets. The Company’s risk of loss related to securitized receivables and leased equipment is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities. The following table presents the assets and liabilities held by the consolidated VIE as of July 31, 2020, which are included in the Condensed Consolidated Balance Sheets. 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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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill The following table represents the change in carrying value of goodwill, by reportable segment, for nine months ended July 31, 2020:
Effective at the beginning of the first quarter of fiscal 2020, 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 quantitative goodwill impairment test for the new segments as of November 1, 2019, which did not result in any goodwill impairment charges. On March 31, 2020, due to the macroeconomic impacts of COVID-19 on the Company's current and projected future results of operations, the Company determined that an indicator of potential impairment existed to require an interim quantitative goodwill impairment test for its reporting units. Based on the results of this interim quantitative impairment test, the fair value of the HPC & MCS reporting unit was below the carrying value of net assets assigned to HPC & MCS. The decline in the fair value of the HPC & MCS reporting unit resulted from macroeconomic impacts of COVID-19 which lowered the projected revenue growth rates and profitability levels of the reporting unit. The fair value of the HPC & MCS reporting unit was based on a weighting of fair values derived most significantly from the income approach, and to a lesser extent, the market approach. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows which we consider to be a level 3 unobservable input in the fair value hierarchy. The Company prepares cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration our historical performance and the current macroeconomic industry and market conditions. The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, the Company estimates fair value based on market multiple earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The Company weights the fair value derived from the market approach depending on the level of comparability of these publicly traded companies to the reporting unit. Prior to the quantitative goodwill impairment test, the Company tested the recoverability of long-lived assets and other assets of the HPC & MCS reporting unit and concluded that such assets were not impaired. The quantitative goodwill impairment test indicated that the carrying value of the HPC & MCS reporting unit exceeds its fair value by $865 million. As a result, the Company recorded a partial goodwill impairment charge of $865 million in the second quarter of fiscal 2020. While the other reporting units were negatively impacted by COVID-19, their fair values continued to exceed the carrying value of their net assets and did not result in impairment. In order to evaluate the sensitivity of the estimated fair value of other reporting units for the quantitative goodwill impairment test, the Company applied a hypothetical 10% reduction to the estimated fair value of each of these other reporting units. Based on the results of this hypothetical 10% reduction to the estimated fair value, each of these other reporting units had an excess of fair value over carrying value of their net assets. However, should economic conditions deteriorate further or remain depressed for a prolonged period of time, estimates of future cash flows for each of our reporting units may be insufficient to support the carrying value and the goodwill assigned to them, requiring impairment charges, including additional impairment charges for the HPC & MCS reporting unit. Further impairment charges, if any, may be material to our results of operations and financial position. See Part II, Item 1A, Risk Factors for a discussion of the potential impacts of COVID-19 on the fair value of our assets. The Company will continue to evaluate the recoverability of goodwill at the reporting unit level on an annual basis as of the beginning of its fourth fiscal quarter and whenever events or changes in circumstances indicate there may be a potential impairment.
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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 nine months ended July 31, 2020, there were no transfers between levels within the fair value hierarchy. Other Fair Value Disclosures Short-Term and Long-Term Debt: At July 31, 2020 and October 31, 2019, the estimated fair value of the Company's short-term and long-term debt was $20.6 billion and $14.6 billion, respectively. At July 31, 2020 and October 31, 2019, the carrying value of the Company's short-term and long-term debt was $19.5 billion and $13.8 billion, respectively. In the second quarter of fiscal 2020, the Company recorded a goodwill impairment charge of $865 million associated with the HPC & MCS reporting unit. The fair value of the Company's reporting units was classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information. For more information on the goodwill impairment, see Note 9 "Goodwill".
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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 Debt Investments Cash equivalents and available-for-sale debt investments were as follows:
As of July 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 in the U.S. as of July 31, 2020 and outside the U.S. as of 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:
Equity securities investments in privately held companies are included in Long-term financing receivables and other assets in the Condensed Consolidated Balance Sheets. The carrying amount of those without readily determinable fair values amounted to $283 million and $190 million at July 31, 2020 and October 31, 2019, respectively. The carrying amount of those marketable equity securities with readily determinable fair value amounted to $29 million as of July 31, 2020. The Company did not have any marketable equity securities with readily determinable fair value as of October 31, 2019. Investments in equity securities that are accounted for using the equity method are included in Investments in equity interests in the Condensed Consolidated Balance Sheets. These amounted to $2.3 billion at July 31, 2020 and October 31, 2019. The Company did not recognize any impairments on these equity investments during the nine months ended July 31, 2020. 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. The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2)Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of July 31, 2020, $83 million of collateral posted was entirely through re-use of counterparty collateral. As of October 31, 2019, $19 million of collateral posted was entirely by way of re-use of counterparty collateral. The amounts recorded on the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges were as follows:
The pre-tax effect of derivative instruments in cash flow and net investment hedging relationships recognized in Other Comprehensive Income ("OCI") were as follows:
As of July 31, 2020, the Company expects to reclassify an estimated net accumulated other comprehensive loss of approximately $99 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions associated with cash flow hedges. 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 were as follows:
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Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings Notes Payable and Short-Term Borrowings Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:
Asset-backed Debt Securities In June 2020, the Company issued $1.0 billion of asset-backed debt securities in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 1.19%, payable monthly from August 2020 with a stated final maturity date of July 2030. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $1.0 billion. In February 2020, 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 with a stated final maturity date of February 2030. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $622 million. In September 2019, the Company issued $763 million of asset-backed debt securities in six tranches at a weighted average price of 99.99% and a weighted average interest rate of 2.31%, payable monthly from November 2019 with a stated final maturity date of September 2029. As of July 31, 2020, the outstanding balance of the asset-backed debt securities was $462 million. The future principal payments on these asset-backed debt securities will be based on the underlying loan and lease payment streams. For more information on the asset-backed debt securities, see Note 8 “Accounting for Leases as a Lessor - Variable Interest Entities”. Hewlett Packard Enterprise Senior Notes In fiscal 2020, the Company completed its offering of the following Senior Notes $1.0 billion issued at discount to par at a price of 99.883% in July 2020 at an interest rate of 1.45% due April 1, 2024, interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021. $750 million issued at discount to par at a price of 99.820% in July 2020 at an interest rate of 1.75% due April 1, 2026 interest payable semi-annually on April 1 and October 1 of each year beginning on April 1, 2021. $1.25 billion issued at discount to par at a price of 99.956% in April 2020 at an interest rate of 4.45% due October 2, 2023 interest payable semi-annually on April 2 and October 2 of each year beginning on October 2, 2020. $1.0 billion issued at discount to par at a price of 99.817% in April 2020 at an interest rate of 4.65% due October 1, 2024 interest payable semi-annually on April 1 and October 1 of each year beginning on October 1, 2020. The net proceeds from the above Senior Notes were used for the redemption in August 2020 of the $3.0 billion outstanding principal amount of the 3.6% registered Senior Notes that were originally due in October 2020. Commercial Paper Hewlett Packard Enterprise maintains two commercial paper programs, "the Parent Programs", and a wholly-owned subsidiary maintains a third program. Hewlett Packard Enterprise's U.S. program provides for the issuance of U.S. dollar-denominated commercial paper up to a maximum aggregate principal amount of $4.75 billion which was increased from $4.0 billion in March 2020. Hewlett Packard Enterprise's euro commercial paper program provides for the issuance of commercial paper outside of the U.S. denominated in U.S. dollars, euros or British pounds up to a maximum aggregate principal amount of $3.0 billion or the equivalent in those alternative currencies. The combined aggregate principal amount of commercial paper outstanding under those two programs at any one time cannot exceed the $4.75 billion as authorized by Hewlett Packard Enterprise's Board of Directors. In addition, the Hewlett Packard Enterprise subsidiary's euro Commercial Paper/Certificate of Deposit Program provides for the issuance of commercial paper in various currencies of up to a maximum aggregate principal amount of $1.0 billion. As of July 31, 2020 and October 31, 2019, no borrowings were outstanding under the Parent Programs, and $737 million and $698 million, respectively, were outstanding under the subsidiary’s program. Future Maturities of Long-term Debt As of July 31, 2020, aggregate future maturities of the Company's long-term debt at face value (excluding a fair value adjustment related to hedged debt of $259 million and a net discount on debt issuance of $10 million), including capital lease obligations were as follows:
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Taxes related to Other Comprehensive (Loss) Income
Changes and reclassifications related to Other Comprehensive (Loss) Income, net of taxes
The components of Accumulated other comprehensive loss, net of taxes as of July 31, 2020, and changes during the nine months ended July 31, 2020 were as follows:
(1)Reflects the adoption of the FASB guidance on stranded tax effects. For more information, see Note 1 "Overview and Summary of Significant Accounting Policies". Share Repurchase Program For the nine months ended July 31, 2020, the Company repurchased and settled a total of 25.3 million shares under its share repurchase program through open market repurchases, which included 0.5 million shares that were unsettled open market repurchases as of October 31, 2019. As of July 31, 2020, the Company had no unsettled open market repurchases of shares. Shares repurchased during the nine months ended July 31, 2020 were recorded as a $346 million reduction to stockholders' equity. As of July 31, 2020, the Company had a remaining authorization of $2.1 billion for future share repurchases. On April 6, 2020, the Company announced that it suspended purchases under its share repurchase program in response to the global economic uncertainty that resulted from the worldwide spread of COVID-19.
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Net Earnings Per Share |
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Net Earnings Per Share | Net Earnings Per Share The Company calculates basic net EPS using net earnings and the weighted-average number of shares outstanding during the reporting period. Diluted net EPS includes the weighted-average dilutive effect of restricted stock units, stock options, and performance-based awards. The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:
(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.
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Litigation and Contingencies |
9 Months Ended |
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Jul. 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 July 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 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. On May 18, 2020, the court issued an order granting in part and denying in part Defendants’ motion to dismiss. The court granted Plaintiffs leave to amend their complaint. On July 9, 2020, Plaintiffs filed a Fourth Amended Complaint. Wall v. Hewlett Packard Enterprise Company and HP Inc. This certified California class action and Private Attorney General Act action was filed against Hewlett-Packard Company on January 17, 2012 and the fifth amended (and operative) complaint was filed against HP Inc. and Hewlett Packard Enterprise on June 28, 2016 in the Superior Court of California, County of Orange. The complaint alleges that the defendants paid earned incentive compensation late and failed to timely pay final wages in violation of the California Labor Code. On August 9, 2016, the court ordered the class certified without prejudice to a future motion to amend or modify the class certification order or to decertify. The scheduled January 22, 2018 trial date was vacated following the parties’ notification to the court that they had reached a preliminary agreement to resolve the dispute. The parties subsequently finalized and executed a settlement agreement and, on May 9, 2018, plaintiff filed a motion seeking preliminary approval of the settlement. On July 2, 2018, the court issued an order granting preliminary approval of the settlement. On December 21, 2018, the court issued an order granting final approval. A Qualified Settlement Fund has been fully funded and distributed to class members. On March 5, 2020, the Court signed an Amendment to Final Approval Order and Judgment, directing that the matter be closed. Jackson, et al. v. HP Inc. and Hewlett Packard Enterprise. This putative nationwide class action was filed on July 24, 2017 in the United States District Court for the Northern District of California, San Jose Division. Plaintiffs purport to bring the lawsuit on behalf of themselves and other similarly situated African-Americans and individuals over the age of . Plaintiffs allege that defendants engaged in a pattern and practice of racial and age discrimination in lay-offs and promotions. Plaintiffs filed an amended complaint on September 29, 2017. Plaintiffs seek damages, attorneys’ fees and costs, and declaratory and injunctive relief. On January 12, 2018, defendants moved to transfer the matter to the federal district court in the Northern District of Georgia. Defendants also moved to dismiss the claims on various grounds and to strike certain aspects of the proposed class definition. On July 11, 2018, the court granted defendants' motion to dismiss this action for improper venue, and also partially dismissed and struck certain claims without prejudice to re-filing in the appropriate venue. On July 23, 2018, plaintiffs re-filed their lawsuit in the United States District Court for the Northern District of Georgia. On August 9, 2018, Plaintiffs filed a notice of appeal of the dismissal of the Northern District of California action with the Ninth Circuit Court of Appeals. On August 15, 2018, Plaintiffs filed a motion to stay their lawsuit in the Northern District of Georgia, which was granted by the court. On February 7, 2020, Defendants resolved the claims of the individual plaintiffs and the matters were dismissed. Hewlett-Packard Company v. Oracle (Itanium). On June 15, 2011, HP Inc. filed suit against Oracle in the Superior Court of California, County of Santa Clara in connection with Oracle's March 2011 announcement that it was discontinuing software support for HP Inc.’s Itanium-based line of mission critical servers. HP Inc. asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. Trial 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. 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. On August 20, 2020, the United States Court of Appeals for the Ninth Circuit issued its ruling, affirming in part and reversing in part the trial court’s decision granting summary judgment in favor of HPE. The matter will be remanded back to the United States District Court for the Northern District of California for further proceedings consistent with the ruling from the United States Court of Appeals for the Ninth Circuit. Network-1 Technologies, Inc. v. Alcatel-Lucent USA Inc., et al. This patent infringement action was filed on September 15, 2011 in the United States District Court for the Eastern District of Texas, alleging that various Hewlett Packard Enterprise switches and access points infringe Network-1’s patent relating to the 802.3af and 802.3at “Power over Ethernet” standards. Network-1 seeks damages, attorneys’ fees and costs, and declaratory and injunctive relief. The Network-1 patent at issue expires in 2020. A jury trial was conducted beginning on November 6, 2017. On November 13, 2017, the jury returned a verdict in favor of HPE, finding that HPE did not infringe Network-1’s patent and that the patent was invalid. On August 29 2018, the court denied Network-1's motion for a new trial on infringement and entered the jury's verdict finding that HPE does not infringe the relevant Network-1 patent. The court also granted Network-1's motion for Judgment as a Matter of Law on validity. Network-1 has appealed the jury verdict of non-infringement to the United States Court of Appeals for the Federal Circuit. HPE has cross-appealed the court’s decision to grant Network-1's motion for Judgment as a Matter of Law on validity. Appellate briefing has been completed. The Federal Circuit Court of Appeal held oral argument on November 4, 2019. Shared Litigation with HP Inc., DXC and Micro Focus As part of the Separation and Distribution Agreements between Hewlett Packard Enterprise and HP Inc., Hewlett Packard Enterprise and DXC, and Hewlett Packard Enterprise and Seattle SpinCo, the parties to each agreement agreed to cooperate with each other in managing certain existing litigation related to both parties' businesses. The Separation and Distribution Agreements also included provisions that assign to the parties responsibility for managing pending and future litigation related to the general corporate matters of HP Inc. (in the case of the separation of Hewlett Packard Enterprise from HP Inc.) or of Hewlett Packard Enterprise (in the case of the separation of DXC from Hewlett Packard Enterprise and the separation of Seattle SpinCo from Hewlett Packard Enterprise), in each case arising prior to the applicable separation. Environmental 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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Overview and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Acquisition | Acquisition On July 11, 2020, the Company entered into a definitive agreement to acquire Silver Peak Systems, Inc. ("Silver Peak"), an SD-WAN (Software-Defined Wide Area Network) leader for approximately $925 million in cash. The transaction is expected to close during the fourth quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions. Silver Peak's results of operations will be included within the Intelligent Edge segment.
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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 July 31, 2020 and October 31, 2019, its results of operations for the three and nine months ended July 31, 2020 and 2019, its cash flows for the nine months ended July 31, 2020 and 2019, and its statements of stockholders' equity for the three and nine months ended July 31, 2020 and 2019. The results of operations for the three and nine months ended July 31, 2020 and the cash flows for the nine months ended July 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, 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 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 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 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 operating 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, impairment of goodwill, transformation costs, disaster charges (recovery), acquisition, disposition and other related charges.
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Use of Estimates | Use of EstimatesThe preparation of financial statements requires management to make estimates, judgements and assumptions that affect the amounts reported in the Company's Condensed Consolidated Financial Statements and accompanying notes. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that the novel coronavirus pandemic ("COVID-19") could have on our significant accounting estimates. Significant estimates that are based on a forecast include inventory reserves, provision for taxes, valuation allowance for deferred taxes, and impairment assessments of goodwill, intangible assets and other long lived assets. The Company believes that these estimates, judgements and assumptions are reasonable under the circumstances, and are subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates change, it could adversely affect the Company’s results of operations. Additionally, as the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates, judgements and assumptions may evolve as conditions change. Actual results could differ materially from these estimates under different assumptions or conditions. |
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 Condensed 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 March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions through December 31, 2022 to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). This guidance was effective upon issuance, as a result the Company adopted the guidance in the second quarter of fiscal 2020 and there was no financial impact on the Condensed Consolidated Financial Statements upon adoption. 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 related 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. In February 2016, with amendments in 2018 and 2019, the FASB issued guidance which changes the accounting standards for leases. The Company adopted the guidance in the first quarter of fiscal 2020, beginning November 1, 2019, using the modified retrospective transition method whereby prior comparative periods will not be restated in the Consolidated Financial Statements. Accordingly, results and related disclosures for the reporting periods beginning after November 1, 2019 are presented under the new lease standard, while comparative prior period results and related disclosures are not adjusted and continue to be reported in accordance with the historic accounting standards. The primary objective of this update is to increase transparency and comparability among organizations by requiring lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the package of practical expedients which did not require the reassessment of prior conclusions related to contracts containing leases, lease classification and initial direct costs ("IDC"). The adoption of the new lease standard on November 1, 2019 resulted in the recognition of $1.0 billion of right-of-use assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet. As a lessor, no transition adjustments were recorded from the adoption of ASC 842. The adoption of the accounting standard for leases had no impact on the Company's Condensed Consolidated Statements of Earnings and Condensed Consolidated Statements of Cash Flows or debt-covenant compliance under its current agreements. Refer to Note 7 “Accounting for Leases as a Lessee” for accounting policy and additional information. Recently Enacted Accounting Pronouncements In March 2020, the FASB issued clarifications relating to its existing guidance on financial instruments. Some clarifications included in this amendment are effective upon issuance and these do not have an impact on HPE’s current accounting practices. For those clarifications which affect the guidance as it relates to the measurement of credit losses, the Company is required to adopt them in the first quarter of fiscal 2021. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In January 2020, the FASB issued guidance to clarify certain interactions between the guidance to account for equity securities, the guidance to account for investments under the equity method of accounting, and the guidance to account for derivatives and hedging. The new guidance clarifies the application of measurement alternatives and the accounting for certain forward contracts and purchased options to acquire investments. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In December 2019, the FASB amended the existing accounting standards for income taxes. The amendments clarify and simplify the accounting for income taxes by eliminating certain exceptions to the general principles. The Company is required to adopt the guidance in the first quarter of fiscal 2022, though early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance on a customer's accounting for implementation costs incurred in cloud-computing arrangements that are hosted by a vendor. Certain types of implementation costs should be capitalized and amortized over the term of the hosting arrangement. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. In August 2018, the FASB issued guidance which changes the disclosure requirements for fair value measurements and defined benefit pension plans. The Company is required to adopt the guidance in the first quarter of fiscal 2021, though early adoption is permitted. The Company is currently evaluating the impact of these amendments however, the Company does not expect the guidance to have an impact on its Consolidated Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and financing receivables, and record an allowance for the portion of the amortized cost the entity does not expect to collect. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued several amendments to the new credit losses standard, including an amendment requiring entities to include certain expected recoveries of the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. The Company is required to adopt the guidance in the first quarter of fiscal 2021. 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 and does not expect it to be material 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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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Operating Results from Continuing Operations | Segment Operating Results Segment net revenue and segment operating results were as follows:
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Reconciliation of Segment Operating Results | The reconciliation of segment operating results to Hewlett Packard Enterprise Condensed Consolidated Financial statements was as follows:
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Schedule of Reconciliation of Assets from Segments to Consolidated | Total assets by segment and the reconciliation of segment assets to Hewlett Packard Enterprise consolidated total assets were as follows:
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Net Revenue by Geographic Areas | The Company’s net revenue by geographic region was as follows:
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Transformation Programs (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | During the three and nine months ended July 31, 2020, the Company incurred $238 million of charges related to the cost optimization and prioritization plan which is recorded within Transformation costs in the Condensed Consolidated Statements of Earnings, the components of which were as follows:
(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the cost optimization and prioritization plan.
(1)Primarily consists of consulting fees and other direct costs attributable to the design and implementation of the HPE Next initiative.
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Schedule of Restructuring Reserve by Cost |
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Retirement Benefit Plans (Tables) |
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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 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.
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Taxes on Earnings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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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Balance Sheet Details (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | Cash, cash equivalents and restricted cash
(1) The Company includes restricted cash in Other current assets in the accompanying Condensed Consolidated Balance Sheets.
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Schedule of Inventory | Inventory
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Schedule of Property, Plant and Equipment | Property, Plant and Equipment
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Changes in Aggregate Product Warranty Liabilities | The Company's aggregate product warranty liability as of July 31, 2020, and changes were as follows:
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Summary of Accounts Receivable, Net | A summary of accounts receivable, net, including unbilled receivables was as follows:
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Accounting for Leases as a Lessee (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Cost | Components of lease cost included in the Condensed Consolidated Statement of Earnings 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 was as follows:
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Supplemental Balance Sheet Information | The ROU assets and lease liabilities for operating and finance leases included on the Hewlett Packard Enterprise Condensed Consolidated Balance Sheet were as follows:
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Operating Lease Liability Maturity | The following tables shows the future payments on the Company's operating and finance leases:
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Finance Lease Liability Maturity | The following tables shows the future payments on the Company's operating and finance leases:
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Operating Lease Liability Prior to Adoption of New Standard | Prior to the adoption of the new lease standard, the future minimum lease commitments on the Company's operating and finance leases were:
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Accounting for Leases as a Lessor (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 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 | 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 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 July 31, 2020 and October 31, 2019 and the respective changes during the nine 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:
(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.
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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 | 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:
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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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Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allocation and Changes in the Carrying Amount of Goodwill | The following table represents the change in carrying value of goodwill, by reportable segment, for nine months ended July 31, 2020:
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Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents and Available-for-Sale Investments | Cash equivalents and available-for-sale debt 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 | The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2)Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of July 31, 2020, $83 million of collateral posted was entirely through re-use of counterparty collateral. As of October 31, 2019, $19 million of collateral posted was entirely by way of re-use of counterparty collateral.
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Offsetting Liabilities | The information related to the potential effect of the Company's use of the master netting agreements and collateral security agreements were as follows:
(1)Represents the cash collateral posted by counterparties as of the respective reporting date for the Company's asset position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. (2)Represents the collateral posted by the Company in cash or through the re-use of counterparty cash collateral as of the respective reporting date for the Company's liability position, net of derivative amounts that could be offset, as of, generally, two business days prior to the respective reporting date. As of July 31, 2020, $83 million of collateral posted was entirely through re-use of counterparty collateral. As of October 31, 2019, $19 million of collateral posted was entirely by way of re-use of counterparty collateral.
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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 related 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") were 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") were 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 were as follows:
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Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of notes payable and short-term borrowings, including the current portion of long-term debt | Notes payable and short-term borrowings, including the current portion of long-term debt, were as follows:
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Schedule of aggregate future maturities of long-term debt at face value | As of July 31, 2020, aggregate future maturities of the Company's long-term debt at face value (excluding a fair value adjustment related to hedged debt of $259 million and a net discount on debt issuance of $10 million), including capital lease obligations were as follows:
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes Related to Other Comprehensive Income (Loss) | Taxes related to Other Comprehensive (Loss) Income
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Changes and Reclassifications Related to Other Comprehensive Income (Loss), Net of Taxes | Changes and reclassifications related to Other Comprehensive (Loss) Income, 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 July 31, 2020, and changes during the nine months ended July 31, 2020 were as follows:
(1)Reflects the adoption of the FASB guidance on stranded tax effects. For more information, see Note 1 "Overview and Summary of Significant Accounting Policies".
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Net Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliations of the Numerators and Denominators of the Basic and Diluted Net EPS Calculations | The reconciliations of the numerators and denominators of each of the basic and diluted net EPS calculations were as follows:
(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.
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Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Jul. 31, 2020
segment
| |
Segment Reporting [Abstract] | |
Number of segments | 7 |
Segment Information - Reconciliation of Segment Assets (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Assets | $ 58,239 | $ 51,803 |
Operating Segment | Compute | ||
Segment Reporting Information [Line Items] | ||
Assets | 17,742 | 14,066 |
Operating Segment | HPC & MCS | ||
Segment Reporting Information [Line Items] | ||
Assets | 6,466 | 6,819 |
Operating Segment | Storage | ||
Segment Reporting Information [Line Items] | ||
Assets | 7,776 | 7,214 |
Operating Segment | A & PS | ||
Segment Reporting Information [Line Items] | ||
Assets | 625 | 440 |
Operating Segment | Intelligent Edge | ||
Segment Reporting Information [Line Items] | ||
Assets | 3,918 | 3,318 |
Operating Segment | Financial Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 14,767 | 14,700 |
Operating Segment | Corporate Investments | ||
Segment Reporting Information [Line Items] | ||
Assets | 580 | 461 |
Corporate and unallocated assets | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 6,365 | $ 4,785 |
Segment Information - Revenue by Geographic Region (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
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Segment Reporting Information [Line Items] | ||||
Total net revenue | $ 6,816 | $ 7,217 | $ 19,774 | $ 21,920 |
Total Americas | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 2,757 | 2,910 | 7,859 | 8,582 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 2,362 | 2,435 | 6,586 | 7,120 |
Americas excluding U.S. | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 395 | 475 | 1,273 | 1,462 |
Europe, Middle East and Africa | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 2,448 | 2,614 | 7,206 | 8,251 |
Asia Pacific and Japan | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | $ 1,611 | $ 1,693 | $ 4,709 | $ 5,087 |
Transformation Programs - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Oct. 31, 2019 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Transformation costs | $ 357 | $ 170 | $ 646 | $ 302 | |
Current restructuring liability reported in Accrued restructuring | 386 | 386 | $ 195 | ||
HPE Next | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Transformation costs | 119 | 172 | 408 | 310 | |
Current restructuring liability reported in Accrued restructuring | 366 | 366 | 164 | ||
Long-term portion of restructuring reserve, recorded in Other liabilities | 55 | 55 | $ 56 | ||
Cost optimization and prioritization plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Transformation costs | $ 238 | $ 238 | |||
Transformation Costs | HPE Next | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Transformation costs | 170 | 302 | |||
Non-Service Net Periodic Benefit Credit | HPE Next | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Transformation costs | $ 2 | $ 8 |
Transformation Programs - Transformation Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
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Restructuring Cost and Reserve [Line Items] | ||||
Total | $ 357 | $ 170 | $ 646 | $ 302 |
HPE Next | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Program management | 10 | 3 | 28 | 23 |
IT costs | 25 | 41 | 71 | 94 |
Restructuring charges | 84 | 92 | 332 | 143 |
(Gain) loss on real estate sales | (7) | 8 | (44) | 1 |
Impairment of Real Estate | 0 | 19 | 19 | |
Other | 7 | 9 | 21 | 30 |
Total | 119 | $ 172 | 408 | $ 310 |
Cost optimization and prioritization plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Program management | 14 | |||
IT costs | 4 | |||
Restructuring charges | 220 | |||
Total | $ 238 | $ 238 |
Retirement Benefit Plans (Details) - Benefit Plans - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
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Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | $ 23 | $ 21 | $ 69 | $ 63 |
Interest cost | 35 | 54 | 106 | 165 |
Expected return on plan assets | (133) | (126) | (402) | (386) |
Amortization and deferrals: | ||||
Actuarial loss | 65 | 59 | 194 | 176 |
Prior service benefit | (3) | (4) | (10) | (12) |
Net periodic benefit (credit) cost | (13) | 4 | (43) | 6 |
Settlement loss | 7 | 4 | 8 | 10 |
Special termination benefits | 0 | 1 | 1 | 2 |
Net benefit (credit) cost | $ (6) | $ 9 | $ (34) | $ 18 |
Taxes on Earnings - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax assets | $ 1,705 | $ 1,515 |
Deferred tax liabilities | (282) | (311) |
Deferred tax assets net of deferred tax liabilities | $ 1,423 | $ 1,204 |
Balance Sheet Details - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
Jul. 31, 2019 |
Oct. 31, 2018 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 8,465 | $ 3,753 | ||
Restricted cash | 472 | 323 | ||
Total | $ 8,937 | $ 4,076 | $ 4,011 | $ 5,084 |
Balance Sheet Details - Schedule of Inventory (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 1,463 | $ 1,198 |
Purchased parts and fabricated assemblies | 2,006 | 1,189 |
Total | $ 3,469 | $ 2,387 |
Balance Sheet Details - Schedule of Property, Plant and Equipment and Narrative (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Property, Plant and Equipment, Net | ||
Machinery and equipment, including equipment held for lease | $ 9,719 | $ 9,464 |
Property, plant and equipment before accumulated depreciation | 11,761 | 11,901 |
Accumulated depreciation | (6,052) | (5,847) |
Total | 5,709 | 6,054 |
Land | ||
Property, Plant and Equipment, Net | ||
Equipment leased to customers | 94 | 241 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Equipment leased to customers | $ 1,948 | $ 2,196 |
Balance Sheet Details - Changes in Aggregate Product Warranty Liabilities (Details) $ in Millions |
9 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Changes in aggregated product warranty liabilities | |
Balance at beginning of period | $ 400 |
Charges | 180 |
Adjustments related to pre-existing warranties | 1 |
Settlements made | (188) |
Balance at end of period | $ 393 |
Balance Sheet Details - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 2,700 | $ 2,782 |
Unbilled receivables | 198 | 206 |
Allowance for doubtful accounts | (42) | (31) |
Total | $ 2,856 | $ 2,957 |
Accounting for Leases as a Lessee - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jul. 31, 2020
USD ($)
|
Jul. 31, 2020
USD ($)
|
|
Leases [Abstract] | ||
Net gain from sale and leaseback transaction | $ 1 | $ 41 |
Amount of operating leases that have not yet commenced | $ 212 | $ 212 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of operating leases not yet commenced | 5 years | 5 years |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of operating leases not yet commenced | 15 years | 15 years |
Accounting for Leases as a Lessee - Components of Lease Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2020 |
|
Leases [Abstract] | ||
Operating lease cost | $ 61 | $ 180 |
Finance lease cost | 2 | 6 |
Sublease rental income | (14) | (46) |
Total lease cost | $ 49 | $ 140 |
Accounting for Leases as a Lessee - Leases included in the Consolidated Balance Sheet (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Operating Leases | |
ROU Assets | $ 977 |
Operating lease liabilities – current | 187 |
Operating lease liabilities – non-current | 902 |
Total operating lease liabilities | 1,089 |
Finance Leases | |
Gross finance lease ROU assets | 52 |
Less: Accumulated depreciation | (3) |
Net finance lease ROU assets | 49 |
Finance lease liabilities – current | 4 |
Finance lease liabilities – non-current | 54 |
Total finance lease liabilities | 58 |
Total ROU assets | 1,026 |
Total lease liabilities | $ 1,147 |
Accounting for Leases as a Lessee - Additional Lease Information (Details) $ in Millions |
9 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Operating Leases, Weighted-average remaining lease term (in years) | 7 years 1 month 6 days |
Operating Leases, Weighted-average discount rate | 2.70% |
Finance Leases, Weighted-average remaining lease term (in years) | 9 years 9 months 18 days |
Finance Leases, Weighted-average discount rate | 3.50% |
Cash outflows from operating leases | $ 178 |
ROU assets obtained in exchange for new operating lease liabilities | $ 214 |
Accounting for Leases as a Lessee - Future Minimum Lease Commitments (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Operating Leases | |
Remainder of fiscal 2020 | $ 57 |
2021 | 199 |
2022 | 179 |
2023 | 161 |
2024 | 138 |
Thereafter | 447 |
Total future lease payments | 1,181 |
Less: imputed interest | (92) |
Total lease liabilities | 1,089 |
Finance Leases | |
Remainder of 2020 | 2 |
2021 | 6 |
2022 | 6 |
2023 | 7 |
2024 | 7 |
Thereafter | 41 |
Total future lease payments | 69 |
Less: imputed interest | (11) |
Total lease liability balance | $ 58 |
Accounting for Leases as a Lessee - Future Minimum Lease Commitments Prior to Adoption (Details) $ in Millions |
Oct. 31, 2019
USD ($)
|
---|---|
Operating Leases | |
2020 | $ 233 |
2021 | 187 |
2022 | 164 |
2023 | 149 |
2024 | 127 |
Thereafter | 541 |
Total | 1,401 |
Finance Leases | |
2020 | 6 |
2021 | 6 |
2022 | 7 |
2023 | 6 |
2024 | 7 |
Thereafter | 41 |
Total | $ 73 |
Accounting for Leases as a Lessor - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 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 | $ 60 | $ 153 |
Accounting for Leases as a Lessor - Components of Financing Receivables (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
Oct. 31, 2018 |
---|---|---|---|
Leases [Abstract] | |||
Minimum lease payments receivable | $ 9,435 | $ 9,070 | |
Unguaranteed residual value | 368 | 336 | |
Unearned income | (760) | (754) | |
Financing receivables, gross | 9,043 | 8,652 | |
Allowance for doubtful accounts | (142) | (131) | $ (120) |
Financing receivables, net | 8,901 | 8,521 | |
Less: current portion | (3,797) | (3,572) | |
Amounts due after one year, net | $ 5,104 | $ 4,949 |
Accounting for Leases as a Lessor - Finance Lease Receivable Maturity (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of fiscal 2020 | $ 1,547 |
2021 | 3,284 |
2022 | 2,373 |
2023 | 1,376 |
2024 | 639 |
Thereafter | 216 |
Total undiscounted cash flows | 9,435 |
Present value of lease payments (recognized as finance receivables) | 8,623 |
Difference between undiscounted cash flows and discounted cash flows | $ 812 |
Accounting for Leases as a Lessor - Minimum Finance Lease Receivables (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
2020 | $ 3,939 | |
2021 | 2,449 | |
2022 | 1,555 | |
2023 | 752 | |
2024 | 306 | |
Thereafter | 69 | |
Total | $ 9,435 | $ 9,070 |
Accounting for Leases as a Lessor - Credit Risk Profile of Gross Financing Receivables (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Gross financing receivables | ||
Gross financing receivables | $ 9,043 | $ 8,652 |
Low | ||
Gross financing receivables | ||
Gross financing receivables | 4,579 | 4,432 |
Moderate | ||
Gross financing receivables | ||
Gross financing receivables | 4,115 | 3,933 |
High | ||
Gross financing receivables | ||
Gross financing receivables | $ 349 | $ 287 |
Accounting for Leases as a Lessor - Allowance for Doubtful Accounts for Financing Receivables (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
|
Allowance for doubtful accounts | ||
Balance at beginning of period | $ 131 | $ 120 |
Provision for doubtful accounts | 28 | 33 |
Write-offs | (17) | (22) |
Balance at end of period | $ 142 | $ 131 |
Accounting for Leases as a Lessor - Gross Financing Receivables and Related Allowance Evaluated for Loss (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
Oct. 31, 2018 |
---|---|---|---|
Leases [Abstract] | |||
Gross financing receivables collectively evaluated for loss | $ 8,174 | $ 8,255 | |
Gross financing receivables individually evaluated for loss | 869 | 397 | |
Financing receivables, gross | 9,043 | 8,652 | |
Allowance for financing receivables collectively evaluated for loss | 89 | 84 | |
Allowance for financing receivables individually evaluated for loss | 53 | 47 | |
Total | $ 142 | $ 131 | $ 120 |
Accounting for Leases as a Lessor - Summary of the Aging and Non-accrual Status of Gross Financing Receivables (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Billed: | ||
Current 1-30 days | $ 339 | $ 301 |
Past due 31-60 days | 71 | 62 |
Past due 61-90 days | 35 | 15 |
Past due > 90 days | 162 | 88 |
Unbilled sales-type and direct-financing lease receivables | 8,436 | 8,186 |
Financing receivables, gross | 9,043 | 8,652 |
Gross financing receivables on non-accrual status | 569 | 276 |
Gross financing receivables 90 days past due and still accruing interest | $ 300 | $ 121 |
Accounting for Leases as a Lessor - Operating Lease Assets Included in Machinery and Equipment (Details) - USD ($) $ in Millions |
Jul. 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] | ||
Total | $ 5,709 | $ 6,054 |
Equipment Leased to Customers | ||
Lessor, Lease, Description [Line Items] | ||
Equipment leased to customers | 7,210 | |
Accumulated depreciation | (3,184) | |
Total | $ 4,026 |
Accounting for Leases as a Lessor - Operating Lease Payments Maturity (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of fiscal 2020 | $ 521 |
2021 | 1,641 |
2022 | 894 |
2023 | 308 |
2024 | 54 |
Thereafter | 3 |
Total | $ 3,421 |
Accounting for Leases as a Lessor - Lessor Activity Included in Income Statement (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2020 |
|
Leases [Abstract] | ||
Interest income | $ 115 | $ 343 |
Lease income - operating leases | 588 | 1,821 |
Total lease income | $ 703 | $ 2,164 |
Accounting for Leases as a Lessor - Assets and Liabilities of VIE (Details) - VIE Primary Beneficiary - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Other current assets | $ 163 | $ 76 |
Short-term | 586 | 194 |
Long-term | 711 | 229 |
Property, plant and equipment | 764 | 303 |
Notes payable and short-term borrowings, net of unamortized debt issuance costs | 1,018 | 385 |
Long-term debt, net of unamortized debt issuance costs | $ 1,057 | $ 370 |
Fair Value - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 31, 2020 |
Apr. 30, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
Oct. 31, 2019 |
|
Financial assets and liabilities measured at fair value on a recurring basis | ||||||
Impairment of goodwill | $ 0 | $ 0 | $ 865 | $ 0 | ||
HPC & MCS | ||||||
Financial assets and liabilities measured at fair value on a recurring basis | ||||||
Impairment of goodwill | 865 | $ 865 | 865 | |||
HPC & MCS | Level 3 | ||||||
Financial assets and liabilities measured at fair value on a recurring basis | ||||||
Impairment of goodwill | $ 865 | |||||
Fair Value | ||||||
Financial assets and liabilities measured at fair value on a recurring basis | ||||||
Fair value, short-term and long-term debt | 20,600 | 20,600 | $ 14,600 | |||
Reported Value Measurement [Member] | ||||||
Financial assets and liabilities measured at fair value on a recurring basis | ||||||
Fair value, short-term and long-term debt | $ 19,500 | $ 19,500 | $ 13,800 |
Financial Instruments - Contractual Maturities of Investments in Available-for-Sale Debt Securities (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Amortized Cost | ||
Due in more than five years | $ 103 | |
Debt securities, Amortized Cost | 103 | |
Fair Value | ||
Due in more than five years | 118 | |
Debt securities, Fair Value | 118 | |
Summary of Investment Holdings [Line Items] | ||
Investments in equity interests | 2,269 | $ 2,254 |
Equity Securities in Privately Held Companies | Long-Term Financing Receivables and Other Assets | ||
Summary of Investment Holdings [Line Items] | ||
Equity securities without readily determinable fair value | 283 | 190 |
Equity securities with readily determinable fair value | $ 29 | $ 0 |
Financial Instruments - Offsetting Assets and Liabilities (Details) $ in Millions |
Jul. 31, 2020
USD ($)
business_day
|
Oct. 31, 2019
USD ($)
business_day
|
---|---|---|
Derivative assets | ||
Gross Amount Recognized | $ 566 | $ 468 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 566 | 468 |
Gross Amounts Not Offset | ||
Derivatives | 202 | 123 |
Financial Collateral | 391 | 263 |
Net Amount | (27) | 82 |
Derivative liabilities | ||
Gross Amount Recognized | 312 | 147 |
Gross Amount Offset | 0 | 0 |
Net Amount Presented | 312 | 147 |
Gross Amounts Not Offset | ||
Derivatives | 202 | 123 |
Financial Collateral | 83 | 19 |
Net Amount | $ 27 | $ 5 |
Business days prior to respective reporting date | business_day | 2 | 2 |
Cash collateral | $ 83 | |
Counterparty collateral | $ 19 |
Financial Instruments - Amounts Recorded in the Balance Sheet (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Notes payable and short-term borrowings | ||
Derivatives, Fair Value | ||
Carrying amount of the hedged assets/ (liabilities) | $ (3,004) | $ (2,987) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets | (4) | 11 |
Long-term debt | ||
Derivatives, Fair Value | ||
Carrying amount of the hedged assets/ (liabilities) | (4,093) | (3,908) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged (liabilities) | $ (255) | $ (72) |
Financial Instruments - Pre-tax Effect of Derivative Instruments in Hedging Relationships on OCI (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | $ (456) | $ 63 | $ (85) | $ 225 |
Total | (539) | 45 | (35) | 202 |
Expected amount of AOCI expected to be reclassified in the next 12 months | 99 | 99 | ||
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | (456) | 63 | (79) | 225 |
Gains (Losses) Recognized in OCI on Derivatives in Net Investment Hedging Relationship | (83) | (18) | 50 | (23) |
Interest rate contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI on Derivatives in Cash Flow Hedging Relationship | $ 0 | $ 0 | $ (6) | $ 0 |
Borrowings - Notes Payable and Short-Term Borrowings (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Oct. 31, 2019 |
---|---|---|
Debt Disclosure [Abstract] | ||
Current portion of long-term debt | $ 4,594 | $ 3,441 |
FS commercial paper | 737 | 698 |
Notes payable to banks, lines of credit and other | 396 | 286 |
Notes payable and short-term borrowings | $ 5,727 | $ 4,425 |
Borrowings - Future Maturities of Long-term Debt (Details) $ in Millions |
Jul. 31, 2020
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of fiscal 2020 | $ 3,349 |
2021 | 2,780 |
2022 | 1,967 |
2023 | 2,483 |
2024 | 2,018 |
Thereafter | 5,537 |
Total | $ 18,134 |
Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Jul. 31, 2020 |
Oct. 31, 2019 |
|
Equity, Class of Treasury Stock [Line Items] | ||
Remaining authorized repurchase amount | $ 2,100 | |
Share Repurchase program | ||
Equity, Class of Treasury Stock [Line Items] | ||
Common stock retired (in shares) | 25.3 | |
Open share repurchases during period (in shares) | 0.5 | |
Repurchases of common stock recorded as a reduction to stockholders' equity | $ 346 |
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Numerator: | ||||
Net earnings (loss) | $ 9 | $ (27) | $ (479) | $ 569 |
Denominator: | ||||
Weighted-average shares used to compute basic net EPS (in shares) | 1,292 | 1,334 | 1,294 | 1,367 |
Dilutive effect of employee stock plans (in shares) | 8 | 0 | 0 | 13 |
Weighted-average shares used to compute diluted net EPS (in shares) | 1,300 | 1,334 | 1,294 | 1,380 |
Net earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.01 | $ (0.02) | $ (0.37) | $ 0.42 |
Diluted (in dollars per share) | $ 0.01 | $ (0.02) | $ (0.37) | $ 0.41 |
Anti-dilutive weighted-average stock awards (in shares) | 21 | 44 | 48 | 4 |
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