Capital Leases

Property under capital leases is comprised primarily of computers and related equipment. Capital lease assets included in the Balance Sheets were $314 million and $274 million as of September 30, 2018 and March 31, 2018, respectively. Accumulated depreciation on the property under capital leases was $83 million and $57 million as of September 30, 2018 and March 31, 2018, respectively.

Depreciation expense for capital lease assets was $25 million and $15 million for the three months ended September 30, 2018 and September 30, 2017, respectively. Depreciation expense for capital lease assets was $47 million and $30 million for the six months ended September 30, 2018 and September 30, 2017, respectively.

Capital lease obligations primarily consist of contractual arrangements with HPE’s wholly-owned leasing subsidiary (“HPE Financial Services”). Capital lease obligations included in the Balance Sheets were $301 million and $304 million as of September 30, 2018 and March 31, 2018, respectively. Interest expense on capital lease obligations was $5 million and $5 million for the three months ended September 30, 2018 and September 30, 2017, respectively. Interest expense on capital lease obligations was $9 million and $7 million for the six months ended September 30, 2018 and September 30, 2017, respectively.

As of September 30, 2018, future minimum lease payments required to be made under capital leases were as follows:



Fiscal Year:	(in millions)
Remainder of fiscal year 2019	$	99
2020	108
2021	71
2022	42
2023	10
Total minimum lease payments	330
Less: Amount representing interest and executory costs	29
Present value of net minimum lease payments	301
Less: Current capital lease liability	146
Non-current capital lease liability	$	155